Silver Is Heading Towards The $30.00 Level

Vladimir Zernov
Published: Apr 5, 2024, 19:33 GMT+00:00

Rising speculative demand for silver may push gold/silver ratio towards 78.


In this article:

Finally, gold’s rally provided enough support to silver markets. Silver managed to settle above the key resistance at $25.75 – $26.00 and moved above the $27.00 level.

While gold tests historic highs, silver is well below its all-time high levels that were reached back in 2011. At that time, silver made an attempt to climb above the $50.00 level.

High gold/silver ratio remains a key problem for silver. In 2011, gold/silver ratio touched lows near the 32 level. This year, gold/silver ratio has mostly fluctuated in the 85 – 90 range.

Why gold/silver ratio has increased? The key difference between gold and silver markets is the absence of central bank purchases on silver markets. Central banks buy gold to diversify their holdings.

As global geopolitical tensions increased, central banks started to buy gold to reduce holdings of foreign government debt. Silver did not enjoy this support, so gold/silver ratio moved higher.

Meanwhile, investors were not willing to increase their holdings of gold and silver ETFs. The approval of spot Bitcoin ETFs served as a negative catalyst for demand for such products. Those willing to have exposure to gold or silver preferred physical metal, while demand for ETFs was focused on Bitcoin ETFs.

However, it looks that the situation is changing for silver. At this point, speculative players can no longer ignore the strong rally in gold markets. Rising geopolitical tensions are pushing gold towards the $2500 level, and some traders are willing to use silver as a catch-up play.

Back in 2023, gold/silver ratio has often settled near the 78 level. If speculative demand for silver increases, gold/silver ratio may move from the current 85 level towards 78, which would be within the normal range for the past few years.

In this case, the price of silver would head towards the $30.00 level even if the price of gold does not move higher from current levels.

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

About the Author

Vladimir is an independent trader and analyst with over 10 years of experience in the financial markets. He is a specialist in stocks, futures, Forex, indices, and commodities areas using long-term positional trading and swing trading.

Did you find this article useful?