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Christopher Lewis
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Silver

Silver markets have rallied significantly during the trading session on Wednesday, to reach towards the $25.50 level. This is an area that could offer a bit of resistance, but it is likely that this will come down to the US dollar and perhaps even more importantly, stimulus going forward. If the market continues to see stimulus as being likely, then it makes quite a bit of sense that the US dollar would fall, thereby putting upward pressure on silver itself. With that in mind, pay close attention to the news flow coming out of Washington DC about stimulus.

SILVER Video 22.10.20

That being said, another thing that you can do to simplify the situation is simply watch the US Dollar Index, as it tends to run inverse of precious metals, and silver is highly sensitive to it as a result. With that being the case, and the fact that the contract is extraordinarily thin, people should be paying close attention to how things correlate, as the markets are essentially running on stimulus and stimulus only. Nothing else seems to matter, and sometimes that is just how the markets behave. They focus on one thing and then move on to the next.

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At this point, demand is totally irrelevant, and of course even though the idea of stimulus increasing demand is a bit of a farce, the reality is that the market is moving on that narrative. Keep in mind, this will be the fourth stimulus package that we have had, and it does not increase demand for things like crude oil, so it is difficult to imagine how silver will see more industrial demand. As far as being a hard asset in avoiding fiat destruction, that of course is a completely different story.

For a look at all of today’s economic events, check out our economic calendar.

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