Silver prices finally managed to interrupt their precipitous fall. Since the beginning of December, the white metal's price collapsed by 10% before we finally saw a rebound in the middle of last week. Now the price is gradually stabilizing around the $24 per ounce mark. Fundamental factors continue to favor a new wave of growth in silver quotations. The upward movement may become more evident when the price rises above the level of 24.3.
Representatives of the mining industry continue to signal a difficult situation in the silver market. According to Keith Neumeier, head of First Majestic Silver, the low price of the metal is not justified due to acute shortages. Global silver production will drop 2% to 820 million ounces this year on projected demand of 1.2 billion ounces. As Neumeier noted, about 30% of silver produced is currently used in the manufacturing of solar panels and electric vehicles, and this segment of demand is growing very rapidly.
At the same time, he estimates that one large silver mining project produces about 10 million ounces of the metal per year. Thus, according to Neumeier, the current deficit will not be covered even if several giant mines come on stream at once. Moreover, there are no major silver mining projects scheduled to start up in the near future. On this basis, silver will remain a by-product of other metals, primarily gold.
Heraeus analysts have a similar viewpoint, although they express some skepticism about the growth in demand for silver next year. In their opinion, the slowdown in economic growth will have a negative impact on silver prices. At the same time, they indicate the forecast range of prices for 2024 as 22-29 dollars per ounce, i.e. the potential for growth from the current levels exceeds 20%.
The nearest target of the bulls in the silver market is to take the level of 24.3. Further it will be possible to target the area of the mark 25. With proper support of the news background these targets can be achieved as early as this week.
Consider the following trading strategy:
Buy silver at the current price. Take profit - 24.3. Stop loss - 23.6.