There are currently two big factors in play at the moment as far as the silver price is concerned.
The first, and the shorter term area of focus, is inflation, especially in the G7 countries, but also more widely globally. The second is anticipated demand for more silver as a component of the manufacturing of solar panels.
Many traders will recall how the silver price responded post the 2008 Great Financial Crisis, not because of the crisis itself, but as a consequence of the massive amount of quantitative easing embarked on by central banks in 2009-2010.
Are we seeing a repeat of the silver bull market of 2009-11?
Back in 2008, silver prices went from just over $8/oz when Lehman Brothers collapsed, to hit a peak of over $48 in 2011 in a massive silver bull run. Silver never really returned to $8 and even in 2015 was still at $14.
Obviously, the pandemic has put a different spin on things entirely. Again, we are seeing massive government and central bank support for economies that have been forced to lock down repeatedly. While there have been expectations that the gold price would move past $2000, there seems to have been more action again in silver recently.
There has been considerable buying of gold for the ETF market, with ETFs in turn buying gold to meet investor demand. But in silver we have seen some more sudden price swings.
There was an initial large swing into silver last summer, although the price has been moving since the start of the pandemic. We saw an initial move from $12, where the price was sitting after the initial panic selling in March 2020, to $18 in July, when things really started to take off for silver. The price came very close to $30, which many analysts now see as a key psychological level for the metal.
Silver has been trading in an upward-trending range of between $22-$28 since then.
Silver prices: what’s different now?
What’s different now? Many investors are expecting inflation to take off at some point, as governments continue to pump huge amounts of money into the economy. There is razor focus on inflation numbers out of the US in particular. The April CPI print for the US shows inflation running at its highest level since 2008.
Investors watching both gold and silver at the moment will be scratching their heads and wondering about the disparity, as the dynamics in silver are pressing upwards while gold struggles. The big difference here is that silver is also considered an industrial metal, and industrial metals ARE on a run at the moment. Silver is also a precious metal and considered a store of value, so investors might expect it to be a protection asset in the case of inflation.
Silver looks set to benefit from both dynamics at the moment – with actual buying for industrial use and also from investors who want to use it to hedge against inflation. This is what seems to be driving the price towards $30.
Here’s a sample of available silver ETFs
Product Name | ISIN | Exchange Ticker | Listing Currency |
WisdomTree Physical Silver Hargreaves Lansdown | Interactive Investor | Chrles Stanley Direct | EQi |
JE00B1VS3333 | PHAG | USD |
WisdomTree Silver Hargreaves Lansdown | Interactive Investor | AJ Bell Youinvest | Charles Stanley Direct | EQi |
GB00B15KY328 | SLVR | USD |
WisdomTree Silver 1x Daily Short Hargreaves Lansdown | Interactive Investor | AJ Bell Youinvest | EQi |
JE00B24DKK82 | SSIL | USD |
WisdomTree Silver 2x Daily Leveraged Hargreaves Lansdown | Interactive Investor | AJ Bell Youinvest | EQi |
JE00B2NFTS64 | LSIL | USD |
WisdomTree Silver 3x Daily Leveraged Hargreaves Lansdown | Interactive Investor | AJ Bell Youinvest | EQi |
IE00B7XD2195 | 3SIL | USD |
WisdomTree Silver 3x Daily Short Hargreaves Lansdown | Interactive Investor | AJ Bell Youinvest | EQi |
IE00B8JG1787 | 3SIS | USD |