Silver prices decreased by more than 15%, from $29 to $24.40 in one single day.
Analysts suggest not to buy much of an asset that is as explosive on the downside as it is on the upside. However, the silver bull market has not finished yet. Right now there is fear in the white metal market.
Silver traded at $18.60 before the coronavirus outbreak. By March 16, it dropped to $12. It was a decrease of more than 33%. Later in May, the precious metal recovered to $18, with an increase of 50%.
By August 11, silver faced more gains of another 55%, trading at $29.
Even though the white metal prices experienced an unexpected drop in just one day, analysts think that there is no need to worry. Silver has not been corrected yet, but it will soon come roaring back.
Looking back to silver’s performance compared to gold, it has been stunning. Since the depths of March, gold prices increased by around 35%. Meanwhile, silver saw a spectacular hike of 108%. Its increase is still much more significant even after its 15% drop.
The Gold-silver ratio spent most of the past 25 years within the range of 50-70. Now it is at 75.
From a technical perspective, analysts think that the white metal prices are likely to correct more before returning to their climb.
The first level of support sits around the level of $23. If the prices broke this gap, then the next support would be at $19-$20, followed by $18.
After its pullback, another rally is expected. However, they are not likely to hold.
Silver May Reach $34 by the End of 2020
Besides being a monetary metal, silver is also an industrial metal. With stimulus packages and money printing, white metal prices will continue to increase. Thanks to unlimited easy money, stocks keep climbing. Silver is vital in the latest tech, solar panels, dentistry, semiconductors, and so on.
Besides, it is antibacterial. That’s the reason the metal is being bought for both industrial and monetary purposes.
In the first half of this year, the precious metal demand increased by 10%.
Holdings in silver Investment Trading Funds reached an all-time high of 925 million ounces by the end of June. Meantime, the mining supply is likely to decrease by 7% in 2020, compared to the previous year.
Analysts think that on the upside, silver targets to reach $34 by the end of the year.
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