Much of the precious metals talk over the past couple of weeks has centered around the stunning rise in the gold price into the mid-1350 range and beyond – and whether or not it will go past these levels.
Many reasons have been muted for the recent rise – global uncertainty is definitely one of them. In an interview on Friday, Jens Stoltenberg, secretary general of NATO, the military alliance, said: “The sheer number of converging threats was making the world increasingly perilous.”
It is well known, at times like these, that investment money flows into safe havens assets. With the ongoing tension between North Korean and the US and the new mobilization of Russian troops towards Europe, it is no surprise that gold reached 11 months high during the previous week.
What is less spoken, however, is the way in which silver follows.
Silver, often considered a poor second to gold, has made a commanding 13% gain since early July. As gold edges up, so does silver and the miners associated with it. As the metal becomes more profitable to them they can afford to refine more of it.
Britain, France, and China have pledged to reduce their greenhouse emissions in serious proposals which they intend to implement. Britain and France introduce total bans on petrol and diesel driven vehicles from 2040. France is to halt all exploration of new oil and gas locations. China is proposing similar restrictions to such vehicles as soon as 2025 to reach its final goal of having 40% of its electricity generated by solar power by this date.
China is aware that every Solar panel needs around two-thirds of an ounce of silver. Batteries and electronic systems for electrically powered vehicles need even more. It is estimated that the solar industry alone uses 5% of the silver supply, and this is set to double to over 100 million ounces.
Add these basic fundamentals to the current US stock markets sentiment and you can conclude, in mimicking the path gold is taking, silver is due to gain even more ground.
Those who study Elliott wave theory will be aware that the market moves in the direction of the major trend in 5 waves, followed by a correction, the ABC wave.
Currently, gold seems to be at stage 3 wave. This is the strongest and most significant wave, and the theory indicates a large move upwards after a possible small correction to retest the 1300 level.
If this pattern applies, silver will be in for a ride upwards to levels not seen since its rise to $45 in 2011.
The US Dollar weakness can be another factor to support this trend. The Dollar trades well below its 2016’s lowest lows with no sign of a change anytime soon.
Watch gold carefully this week – and keep an eye on the silver …
Noble Gold specializes in IRAs and 401(k) rollovers through precious metals and cryptocurrencies investments.