Make Kitco Your Homepage

Investors can’t ignore ‘anything that is shiny’ – silver analyst

Kitco News

(Kitco News) - After a long wait, silver has broken its shackles and continues to outperform gold; although prices are look a little overbought, and analysts say that there is still room for prices to move higher.

Silver continues to hold its own after breaching $18 an ounce for the first time in two years. Many analysts are now watching $20 as the next major test for the precious metals. Although off its highs, silver is still holding on to solid gains; December silver futures last traded at $18.325 an ounce, up 1% on the day.

“I don’t think you can ignore the markets strong buying momentum after it broke through important resistance levels,” said Ole Hansen.

Although growing concerns about a global recession could weigh on silver’s industrial demand, which makes up 50% of the silver market, Hansen added that in the near-term investor demand for safe-haven assets can easily dominate the marketplace

“I don’t think you can ignore the investor appetite for anything that is shiny,” he said. “Traders who missed out on the safe-haven play in gold are now jumping into silver as the next value play.”

Adding to investor fears and boosting safe-haven demand for precious metals are a further inversion of the U.S. bond market. Wednesday saw the 10-year bond yield fall even further below the interest rates on two-year bonds. At the same time interest on 30-year bonds fell below 2%.

Afshin Nabavi, head of trading with MKS (Switzerland) SA, said that he is bullish on silver as speculative positioning shows that some investors have been caught on the short-side.
He added that there is enough speculative momentum to push prices to $19 an ounce.

He added that he wouldn’t rule out a run to $20 an ounce as he expects gold to continue to push higher.

“I think $18 will provide strong support for silver and we will see the market build base in its run higher,” he said.

Nabavi added that ongoing geopolitical uncertainty and the never-ending trade war will continue to weigh on investor sentiment and support precious metals. He also noted that because of silver’s volatility it should continue to outperform gold.

“I don’t think we will see normal market action for a while and this volatility will continue to drive gold and silver prices higher,” he said.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.