CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Silver Outlook: Financial Asset Meets Green Agendas

Article By: ,  Market Analyst
May 29, 2024 1:51 PM

  • Silver retested an 11-year high at $32.52 per ounce

  • Increasing Silver demand is expected in alignment with global Green Agendas 

  • Exponential AI advancements are expected to boost silver demand potential

  • Technical Analysis: Key levels to watch

 

Since the sharp rebound of silver in 2020 near its $11 low, leading economists including Robert Kiyosaki, Mike Maloney, and Ray Dalio have highlighted the potential of silver as a robust investment, from both financial and environmental perspectives. The fundamental strengths of the metal, coupled with significant price action patterns throughout its chart history, have made silver an attractive investment opportunity since 2020.

Analyzing the Foundations of the Silver Bull Run:

Alignment with Global Green Agendas and Sustainable Development Goals (SDGs): From the agendas of the United Nations towards that of China and the UAE, extending from 2030 to 2060, silver is regarded for its key role in the advancement of sustainable plans. Its industrial applications align with:

  • Clean Energy Transition: Silver is essential in the production of solar panels and electric vehicles. Recent headlines highlight increased Chinese demand for solar panels, boosting silver premiums and reducing inventories.
  • Innovation and Renewable Technology: Silver's use in electronic devices and 5G networks supports innovation and sustainable technology initiatives.
  • Climate Action: Silver's role in water purification and treatment underscores its importance in climate mitigation efforts.

 

Monetary System Significance: the silver standard, along with that of gold have played a crucial role in shaping the grounds of our monetary system today, having the real and scarce store of value behind our currencies. With that fact, investors seek the precious metals as a hedge for the ever-growing inflationary pressures. In terms of affordability, silver is in the spotlight for the easier affordability over the yellow metal, sharpening its performance and demand levels.  

 

Correlation with Artificial Intelligence Trends: Silver, known for its exceptionally low electrical resistance among metals used in tech manufacturing, is poised to benefit from the exponential growth of AI. As AI technology advances, the demand for silver is expected to surge in tandem. Silver, along with palladium and platinum, plays a crucial role in powering the chips at the heart of AI technology. This essential function underscores the vast potential and increasing demand for these metals, driven by their critical contributions to the rapidly evolving tech industry.

 

 

Technical Analysis:

Silver Outlook: XAGUSD – Weekly Time Frame – Logarithmic Scale

 

 

Long-Term Bullish Perspective: Using the Fibonacci extension tool from the 2008 low, 2011 high, and 2020 low:

  • The 32.52 level aligns with the 50% extension level
  • The 37.20 level aligns with the 61.8% extension level, and a break above 34 would confirm the up-trending trajectory as it represents the 61.8% retracement zone between the chart’s all time high and low
  • The 40 level is a significant round number checkpoint prior to a potential continuation towards the 44.20 zone.
  • The 50 level represents a key milestone between silver's all-time high and new historical levels, potentially approaching a three-digit value.

Medium - Long-term Bearish Perspective: Supports are currently held near the 2020 high resistance levels between $30-$29. Further drops could regain bullish momentum at $28, with $26 as the next potential support in a more extreme bearish scenario.

 

The World’s leading economies, with China in the lead as the largest consumer, are increasingly incorporating silver within their industrial expansion trajectory, setting the metal on a high potential bull run. Contractionary policies and geo-political risks might halt the progress of the mentioned trends, yet the bullish potential of the metal can stay promising from an evergreen outlook.  

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024