Skip to main content

Zinc(ZAX22)
COMEX

Today's Change
Delayed Last Update

Why Silver is Most Attractive Investment

Gold Predictors - Sun Jan 22, 2023

Silver is a precious metal that has been used for centuries in various forms of currency and as a store of value. It is widely considered to be a safe haven asset and its price is often used as a barometer of the health of the global economy. iShares Silver Trust ETF (SLV) is an exchange-traded fund (ETF) that invests primarily in physical silver. The ETF is designed to track the price of spot silver (XAGUSD), and it is traded on major stock exchanges like the NYSE. SLV is a popular investment option among those looking to diversify their portfolio and gain exposure to the silver market.

High Interest Rates & Inflation

In 2022, the financial demand for physical silver is significantly higher and spreads are considerably wider. The Consumer Price Index (CPI) has increased significantly, resulting in a substantial increase in inflation; therefore, the Federal Reserve was compelled to raise interest rates above 4% in order to reduce inflation. Consequently, the likelihood of a recession has increased. The economy of the United States is significantly impacted by rising debts, inflation, and interest rates. In contrast, the US dollar index has achieved its primary objective and is currently attempting to retrace to lower levels, which will further increase the demand for silver. In spite of the Federal Reserve's efforts to raise interest rates, I believe that inflation will reach its peak in 2023 due to a variety of factors, including increased retail sales, the possibility of a decline in building permits, and a significantly lower unemployment rate.

Long-Term Picture of the Silver Market

With spot silver acquiring a solid base at long-term support of $17.60, it is currently going higher. In 2020, the gold-silver ratio reached its highest point which is now going down with a bearish formation. Whereas, the silver market is expected to gain strength and continue to be strong in 2023 as a result of increasing inflation, increasing interest rates, rising debt, and the U.S. economy. The downward slide in the gold-silver ratio increases the likelihood of a substantial silver rally over the next few years. The targeted price in the spot silver market is $35, with a target of going up to $50. The quarterly chart below shows that a breakthrough above $50 could trigger a significant millennium rally in the silver market with $19-$20 acting as an excellent investment opportunity for long-term investors. The chart below also exhibits a rounding bottom, which indicates a robust buying opportunity. The short-term outlook in the silver market is also bullish, with the emergence of inverted head and shoulders and triple bottom. The neckline is broken and prices are looking higher. 

 

Bottom Line

Based on the above analysis, silver could be one of the most secure and lucrative investments in 2023. Due to the possibility of a recession and the economic slowdown, silver's market demand will increase significantly. The gold-silver ratio has reached its peak, indicating that the investor should hold onto more silver. As of now, there is a greater opportunity to buy spot silver between $19 and $20, with a target range of $35 to $50. The price of spot silver has not broken through the pivotal level of $17.60; which indicates that the long-term bottom is confirmed. SLV provides investors with exposure to the silver market at a lower cost than physical silver, making it a more attractive investment vehicle.

Subscribe to Gold Predictors, to receive free and premium articles and trading signals. 


On the date of publication, Muhammad Umair, PhD did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.