In our 15th Nov’24 dated trade recommendation we have looked optimistically at Silver fundamentals & have forecasted it’s price to rise to 40$. https://macro-spectrum.com/trade-recommendation/long-silver It’s price then was 30$. The worst we saw since the recommendation was 28$ and it is currently trading at 36$. Gold is up 26% this year as an expanding US-led tariff war boosted its safety appeal and central banks maintained elevated levels of buying. Silver had been significantly lagging behind, but is now catching up, with year-to-date gains of 24%. Silver is currently trading at the $36 handle & the break of the psychological 35 handle has meant we have established 14y highs. We have started to see macro participation in topside silver structures mainly via calls, CS and digis, and front-end vols are seeing a decent pickup. Our target is 40$ level where we expect to find short term resistance. Our bullishness on Silver flows from the fact that the silver market is forecast to record another significant deficit (total supply less demand) for the fifth consecutive year in 2025. Also the gold-silver ratio has been one of the most reliable technical ‘buy’ indicators for silver, whenever the ratio climbs above 80. Currently it is at 94 levels. Despite headwinds from firmer UST yields, investor sentiment has improved towards Silver during H1CY25. This largely reflects several macroeconomic and geopolitical risks, which have continued to underpin inflows into safe-haven assets, such as silver and gold. The recovery has been assisted by short covering by tactical investors in the futures market amid fears about President Trump’s tariff plans and a subsequent spike in futures and spot silver prices. We continue to remain bullish on Silver for a short-term target of 40$ for above reasons.
