The Magazine for Asian Investors
Silver was able to crack the important $24 mark late Friday after Fed Chair Powell announced the current monetary policy will be maintained for now.
Gold has already started a bull run in the last year and marked a new all-time high at just over $2010. But what about silver?
Silver has so far only hinted at the potential of the precious metal. In the meantime, silver was able to crack the $28 mark, but it is still a long way to the 2011 high.
So what else can we expect from silver?
First of all, we should look at last year’s performance of silver. If you compare the performance of silver with gold, S&P 500, DJI, and the DXY, you will see that silver had the best performance. The chart below shows the comparison of the different asset classes in 2020.
In this view, the picture of silver now looks quite positive.
One should not forget, gold leads the way, silver is the follower. Previous precious metals bull markets have shown that gold moves first, while silver is a mid to late-cycle mover, but silver moves faster and further. This gives us hope, especially if we are possibly in the mid-cycle of a precious metals bull market, we could see silver move higher soon.
Especially since the fundamentals are still in place. All the points that devalue a currency are, still active. Negative real interest rates, quantitative easing, and large debt and deficits are all measures that devalue a currency and make precious metals shine.
In the long run, silver will play a major role, especially in the sprint for decarbonization. Whether solar cells or electric vehicles, silver is needed for most applications. This is also due to the fact that silver has the highest conductivity of all metals. President Biden’s infrastructure plan will further increase demand for silver while also freeing up a lot of liquidity, which in turn will again be in favor of precious metals.
Therefore, investors who are not afraid of taking risks could also take a look at the silver market.
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