From 'dead money' to a breakout: Silver's fortune is about to change
(Kitco News) Silver has been "dead money" for the past six months, but its fortune is about to change with the precious metal's fundamentals pointing to a breakout towards $35, said Jim Iuorio, TJM Institutional Services managing director.
After frustrating several months, silver finally found its spotlight, Iuorio told Michelle Makori, editor-in-chief of Kitco News. Silver is up more than 4% on the week so far, with the potential to go a lot higher.
"I've been long silver for quite a while, and it's been a painful trade. Copper broke out of a pretty significant technical pattern last week, and I believe silver is following it today," Iuorio said.
The problem with silver was that investors were trading it as a precious metal. And this made silver "dead money" as the novelty of bitcoin took money flows away from both gold and silver. But that perception is now changing, Iuorio pointed out.
"Silver has been trading with gold and has been dead money for about the last six, seven months. I believe the market was viewing it as a precious and trading it like a precious. The $2.5 trillion cryptocurrency market was attracting some of the speculative inflation hedge money. And it was leaving gold and silver for dead. I think that both of those things are going to change, but I think for silver, it is changing now," he said.
The technical analysis shows that within one year, silver could move as high as $35, Iuorio said. "Silver could easily trade back up to $35. Once the metal moved above $22, it opened great upside."
The reason for Iuorio's optimism is the market's changing perception of the metal's fundamentals. "Silver could easily be grouped in some of the green new deal commodities like copper. Silver is used in solar panels, electric conductivity, which is very, very important in the new green deal," he said.
What's more important is not the amount of silver used in these green technologies but the market's perception around all of this.
"I care when the market changes its focus and decides that silver's going to be the flavor of the day, the month, the six-month period. And I believe that's happening right now. And that's what technical analysis tells me," he noted. "The fundamental story is not as important as the fact that the market comes to this realization, and you just try to be ahead of it."
Silver also plays well with the current inflation narrative. "I have the whole dollar-hedge section of my portfolio, which is a real estate, platinum gold, silver, bitcoin, ethereum," Iuorio said. "These to me are [the assets to hold] if things start to get really bad."
Watch the video above to find out Iurio's views on inflation and why he thinks it's "insanity" what the Federal Reserve is doing right now. Follow Michelle Makori on Twitter: @MichelleMakori (https://twitter.com/MichelleMakori).