Silver holds its value
Doubters claim that one of the primary branches of Silver use, photography, by now has diminished to a 2.8% share within Silver’s fundamental value. While that is true, it is overlooked that the use of Silver is expanding rapidly. The research consultancy Metals Focus expects industrial demand to increase to 1.03 billion ounces this year. Close to the record high of 1.07 billion ounces in 2013. Silver holds its value.
With a stagnation of Silver’s supply through mining and recycling over the last twenty years, prices are forced higher by any expansion in new applications of Silver. We see expandable markets for Silver use in water treatment, flexible displays, the pharmaceutical industry, 5G communication, RFID (Radio Frequency Identification Devices), nanotechnology, silver oxide batteries, high-performance engines, functional clothing, and solar technology.
The most decisive influencing factors of the future regarding innovation are:
- Development speed.
- Reduction of size in electronics.
- The increased need for data transfer speed in the communication sector.
Obviously, 5G has nearly scratched the surface in its possibility of offering new markets to hip-pocket to this wireless edge.
Silver in US-Dollar, Monthly Chart, A prosper future:
These long-term stabilizing factors are already seen in price development for the longer-term investors. A look at the monthly chart reveals a clear direction to the upside. And in our humble opinion, we are only in the infancy of this trend establishment.
In addition to solid fundamentals, we bet on high probabilities, and one aspect is historical pattern repetition. The chart reveals the actual possibilities from the larger picture, where we have a small bullish pattern over the last two years within the larger view framed that supports continuous growth. While wealth preservation is our primary focus, we see quite some potential also for wealth creation in this specific case.
Weekly Chart, Silver in US-Dollar, Treading water but not for long:
As much as smartphones, TVs, LED Chips, and consumer electronics as a whole will push the demand for Silver forward, in the short term, patience is needed. Market manipulation in the Silver and Gold market and daily allocation rotation between the precious metal sector and Bitcoin, are hedge mechanisms for the larger players. They adjust their bets and time their entries. Consequently, making it cumbersome for the smaller retail players to position themselves. You find support in our free Telegram channel from professional traders who maneuver their different time frame allocations through those rough waters with success.
The weekly chart provides some clarity for this volatile sideways market. We can make out that Silver made a massive first leg up-move (from US$11.64 to US$29.86, a 157% advancement). In the second part of last year, Silver traded in a range from roughly US$22.75 to US$28.25. This year, that range got tightened from US$24.50 to US$28.25. While we established supply zones, we still are within a sideways trading range for over a year now.
Fundamentals and regular trading analysis elude this price behavior. Clearly reflected in an exuberant difference between spot price trading and physical purchase prices for Silver. Markets aren’t clean or scientific, and with prices attacking the US$25 level and still a possibility of a retracement towards the US$23 to US$22 level again, investor sentiment could dwindle.
Nevertheless, we are far from discouraged but are aware that we live in extraordinary times and that patience isn’t just a virtue but, in this case, needed to be part of a wealth preservation strategy that has solid, rooted legs within physical Silver ownership. As such, should prices decline, we would find that a buying opportunity once more.
Gold in US-Dollar, Weekly Chart, Timing, watch for Gold:
Over the last three months it has become more evident that Gold’s leadership role has a dramatic effect on Silver. Money flow between the two metals and various hedge strategies have had a strong impact. Almost a blockage by Gold stopping Silver’s efforts to run dead in its track. We advise closely watch Gold’s development for entry timing of Silver positions and only when all elements fall into place to pull the trigger. Even the nicest Silver setups seem to dry out quickly if Gold isn’t willing to lead the move.
Some of the most durable minds get weak if you are sitting duck for over a year with a buy and hold/hodl perspective. It is that psychological reason that we have seen too often traders give up and exit a long-term position right before they take off that motivates us to rather position build. We use a quad exit strategy where the last part of a position possibly survives retracements, and throughout a year, many of these runners pile up and build a long-term position that’s risk-free and has the potential to be part of the second leg up.
Silver holds its value
The research consultants from Metals Focus make a reasonable claim. They expect nothing less but a multiplication of Silver demand over the next ten years. Reasons are not just an increase in demand for existing applications of Silver, but an expanding growth rate of new fields of application. We see this in alignment with the principle fact of Silver’s unique and specific properties. Consequently, there are no alternatives of substitution. These unique facts of Silver’s provide the additional fundamental stability that we, as wealth preservers, welcome in our long-term speculation to use Silver as a wealth preservation and wealth creation tool.
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