Silver seeing healthy consolidation, building a base to $50 - Andrew Hecht
Andrew Hecht, creator of the Hecht Commodity Report, said in a report published Monday that he remains bullish on silver, even as the price continues to consolidate below $28 an ounce. Although he expects to see volatility through 2021, he said he expects prices above $50 an ounce.
Hecht's outlook comes as silver prices try to recover from last week's selloff. May silver futures last traded at $26.81 an ounce, up 0.5% on the day.
He added that silver continues to ride the bullish momentum that can be seen throughout commodity markets with coffee, sugar, copper, tin and lumber prices at multi-yearn and even all-time highs.
"Market participants looking for a continuation of bullish price action in the commodities asset class could stampede into the silver market over the coming weeks and months," he said. "I believe we will see a new record high in the silver market over the coming months and years, but it could be a very bumpy ride to the upside, as we witnessed in 2020."
While an improving global economic outlook helps boost silver's industrial demand, Hecht said that the market is still dominated by investor sentiment.
However, he added that he expects investor sentiment to remain healthy as investors look to protect themselves from rising inflation pressures as central banks and governments worldwide pump liquidity into financial markets.
Hecht said that silver's price outlook hasn't been this bullish since the 2008 financial crisis.
"With the stimulus and liquidity levels higher today than during the global financial crisis, the coming years could see an inflationary spike that ignites silver to prices analysts have yet to consider," he said
Because of silver's volatility, Hecht said investors should pay attention to marketplace trends to build core positions.
"Never look to buy bottoms or sell tops. The goal should be to take a significant percentage out of price trends," he said. "At some point, I expect silver to move into a parabolic period. Be prepared to enjoy the ride."