Silver has been much more stable compared to other precious metals in recent days. While gold, platinum and palladium are updating their multi-month lows, silver has found support near the 22 level and has not fallen any lower. This week, silver has performed an upward rebound. The growth rate has been moderate so far, but the fact that the price is trying to recover points to high demand for silver among market participants.
Silver’s brief recovery stalled yesterday ahead of a busy day of central bankers speaking at the ECB forum in Portugal. The market is now expecting more interest rate hikes both in the U.S. and Europe. Central banks still have room for further monetary policy tightening. This is a detrimental scenario for silver.
According to some analysts, silver still feels undervalued as the metal is likely to be in demand even during a recession, as its key role within the energy transition means that the need for silver will continue. Moreover, production of this metal remains at an insufficient level, which means that its deficit could increase.
China has the world's highest demand for silver, but it provides only about half of the metal's supply. Production is decreasing, and by 2033 China will have to nearly double its imports of silver.
The situation is even worse in Mexico — the largest silver producer in the world. If no new mines and quarries are put into operation, the production of silver could almost completely stop by 2026. Out of 10 biggest silver producing countries, only Australia has enough metal reserves to last more than 20 years.
Currently, the closest target for silver buyers is $23 an ounce. In case of success, the price may rise slightly higher, to the level of 23.2. The Stochastic indicator confirms a buy signal.
Consider the following trading strategy:
Buying silver in the 22.4–22.7 range. Take profit 1 — 23. Take profit 2 — 23.2. Stop loss — 22.1.
Traders may also use a Trailing stop instead of a fixed Stop loss at their discretion.
This content is for informational purposes only and is not intended to be investing advice.
