Silver is a great commodity to invest in, especially in times of higher interest rates.
Forget gold, this historical period might be perfect for investing in another valuable material, usually reserved for second places but that will surely make you first. Silver is showing bullish signs, with a possible pivot point at 22.77.
The largest exchange-traded fund for silver, iShares Silver Trust, is decreasing its silver holdings. As of Thursday, they had depleted their reserves by 5.7 metric tons to 1,3744.11 metric tons.
Silver is in high demand right now, as it is an essential component of solar panels. As countries around the world increase their energy reliance on renewable energies, including solar, silver demand continues to rise.
China, for example, will likely meet its 2030 solar goals 5 years earlier if it continues to build solar farms at the current pace. Likewise, China is heavily investing in wind and nuclear power. Although the country is still the world’s largest coal producer, it’s trying to increase green energy use.
What’s more, silver appears to be resilient to high interest rates by central banks. The American Federal Reserve confirmed its “higher for longer” strategy at its latest meeting. On the other side of the Atlantic, the European Central Bank raised interest rates by another 25 basis points.
Silver is similar to gold in its safety as an asset. This is why, according to senior market analyst Ed Moya, "Once the peak of Fed tightening is confidently in place, silver should become attractive again".
Technical analysis
Silver’s bullish run started yesterday on Thursday. This morning, the precious metal successfully passed the $22.77 per ounce support level and is headed into $23 territory. Silver also passed another support level at $22.958.
- SILVER (US$/OZ) - 30M
Target prices right now are $23.25 and $23.40, which is likely to reach by the end of October. This is because the Relative Strength Index (RSI) is showing a continued upward trend.
According to Ed Moya, silver could easily pass the $24 mark by the end of the year. In his view, demand will continue to rise as production will hardly make up for it. "Silver might see its biggest deficit in over a decade as mining production cannot keep up with demand,” he said, attributing such a surge to increased popularity in the solar panel industry.
You can invest in silver by subscribing to an online broker and placing your bet on an exchange-traded fund. Stocks of iShares Silver Trust jumped by 0.19% on Friday before the bell.
