Silver’s fiery rally is going out this morning, but it might be the place for another hectic rally.
This morning, there was a decline after CME Group, the world’s largest financial derivatives exchange trading in various asset classes, including commodities and currencies, increased their margin requirements for futures, just days after launching the collective of users of social media platforms like Reddit. retail power to raise prices.
Spot silver jumped 7.3 percent on Monday to reach its highest level since February 2013 at $ 30.03, but traded at $ 27.64 an ounce this morning, down 4.6 percent.
But unlike GameStop Corp., a failed video game retailer, retail investors may have unwittingly encountered a winner thanks to its own strong fundamentals.
Still, no one expects a 1,600 percent rally for metal.
“(Silver) Prices will continue to remain volatile, but lower than expected US 5-year real rates and the approach of holding stocks in India and China by Q2’21 could push prices up to US $ 33 / ounce” analyst Maximilian Layton.
The Wall Street bank analyst predicts that silver will rise to $ 38, but he doesn’t expect the buying passion for volatile metal to persist, in part because returns may not be attractive to retail investors who are developing a three-person pleasure. even four-figure percent gains.
“Unlike some small capital US stock meters with significant short interest rates, the silver complex is already ‘longer’ than the speculative futures position (net, direct and normalized) such as the physically backed silver ETF product. Layton said, therefore, the silver market is a altogether, the fund’s net long terms are now longer. “
In December, UBS Switzerland AG expected silver to outperform gold with a target of $ 26-28 / ounce in early 2021, based on “industrial applications, not internet speculation.”
“The nature of the last leg may contribute to price volatility and pose some near-term upside risks to our target. “We expect silver to continue to outperform gold throughout the year,” said Mark Haefele, UBS chief investment officer, in a report.
RBC Capital Market also believes gold and silver will show strong performance this year in a global monetary environment that could see inflation for the first time in a decade.
“We also note that the gold / silver ratio only overshadows the long-term average, seeing that silver outperforms overall in times of stronger precious metal markets,” said RBC analyst Tyler Broda.
While Broda expects Reddit boards to trigger a price increase in the short term, silver will be a harder market for retail investors to manipulate.
“The world precious metal markets have evolved over thousands of years, which in our opinion makes this market more robust than a small company with worsening expectations,” said BRoda.