Trillions of dollars were pumped into financial markets this past year and that won’t come without consequences. Economists suggest investors should brace for inflation in 2021.
Silver’s bull market is just beginning and could become the “primary metal” in benefiting from electrification and quantitative easing next year.
The precious metal will follow in gold’s footsteps towards its own record high, with technicals pointing to a nascent bull market. It is uniquely precious and increasingly industrial, leaning toward probabilities that the metal — known as leveraged gold – could follow its golden peer to new heights.
New record highs for the silver market could push it past $50 an ounce, effectively silver’s current trading levels. At the time of this article, March Comex silver was trading at $25.37, down 3.83% on the day. Silver’s price potential is similar to 2008, which saw the start of a rally that took the metal to nearly $50.
Annual technical indicators for silver are much like those at the start of the 2000 and following 2008. We see the metal following a similar trajectory as the aftermath of the financial crisis toward $50 an ounce, but with greater potential for staying power on a path paved by gold.
This year’s breach of the $20 resistance level was very significant and will help silver move even higher next year.
Projections indicate that the 2020 low would be at about $12 and as enduring as $8.50 from 2008, which hasn’t traded since. The 2008 launchpad peaked in 2011 with silver matching the 1980 high at about $50. Underpinnings are firmer this time, as evidenced by the five-year moving average recently turning upward. A risk-off event like 1Q should find good silver support at around $20.
This year’s price action was especially volatile amid all the coronavirus disruptions, with silver first falling below $12 and then surging to a seven-year high of nearly $30.
Bull markets are supposed to get overextended and this one may be just beginning. The market has turned upward following an extended period of subdued prices and may just need some back-and-fill before resuming the rally. Additional technicals point to responsive buyers as more likely to prevail on dips than sellers on rallies.
