Gold’s Started to Move, But Keep An Eye on Silver

The comments below are an edited and abridged synopsis of an article by Neils Christensen

Weaker inflation has pushed gold to a 3-week high, holding solidly above $1,950 an ounce, and while sentiment bullish, there are still reasons to be cautious.

Gold’s Started to Move, But Keep An Eye on Silver - BullionBuzz - Nick's Top Six
Assorted Silver Coins and Silver Bar, depicting the 999 level of purity in the Silver.

Silver is the metal attracting some serious attention. Silver was up $1.87 last week (a gain of more than 8%), its best weekly performance since mid-March.

According to some analysts, the headwinds for silver are starting to dissipate. With the Federal Reserve close to its peak rates, silver is benefiting from shifting monetary policy expectations.

At the same time, even in this aggressive monetary policy environment, the economy has been reasonably resilient, which supports silver’s industrial usage. Analysts note that silver should outperform gold if the Fed can thread the needle and achieve a soft landing.

Investors are starting to realize that the world needs a lot more silver for renewable energy if we are going to meet net-zero goals by 2050.

And while silver has a bright future, the headwinds surrounding the Fed have not gone away. Commodity analysts at TD Securities warn investors that silver’s breakout into a sustainable bull market is at least three months away.

One sector of the silver market that investors should keep an eye on is physical demand. Demand for silver bullion was low in the first six months of 2023, according to sales data from the U.S. Mint and the Perth Mint.

The U.S. Mint said that in the first half of 2023, it sold 9.7 million 1-ounce America Eagle Silver coins, down 9% compared to the first six months of 2022. Its American Eagle Gold bullion sales were down only 1% in the first half.

If this rally in silver is going to last, this is a trend that needs to reverse.