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Silver to see ‘strong’ rebound in October, says Orchid Research

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Silver to see ‘strong’ rebound in October, says Orchid Research

(Kitco News) Silver has a lot more upside potential compared to gold and prices could see a “strong” rebound in October, according to Orchid Research.

After kicking off the month with six-week lows, silver could be looking at a solid recovery as the U.S. Federal Reserve leans into a more dovish direction, the research firm said in a Seeking Alpha post on Wednesday.

“The recent sell-off … has been mainly driven by a meaningful resilience of the dollar despite the dovish statement of the Fed at its latest FOMC meeting,” Orchid Research said. “As too much strength in the dollar will become ultimately a Fed's problem, we expect the U.S. central bank to turn more dovish, resulting in a lower dollar and weaker U.S. real rates.”

December Comex silver prices tumbled to just below $17 an ounce on September 30 and since then managed to recover to $17.61 with more upside in the cards.

Investment demand in silver is looking encouraging as well, especially when compared to gold’s speculative positioning.

“There is plenty of dry powder to deploy on the long side of silver, which could result in a marked outperformance of silver prices to gold prices in Q4,” the post said. “Given the large room for additional spec buying in silver, both in absolute and relative basis, we believe that silver spot prices could perform well.”

With growth fears rising in the marketplace silver stands to benefit due to its “safe-haven” characteristics, Orchid Research added.

“Silver, similarly to gold, should continue to enjoy positive investment flows in this fragile macro environment where global economic growth is slowing down and investors become increasingly concern about a potential recession and its negative implications for their portfolios,” the research firm said.

When making price projections, Orchird Research said it sees Aberdeen Standard Physical Silver Shares ETF (SIVR) hitting $19 in October.

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