Record industrial demand supports the price of silver
After silver hit an all-time high of $49.51 an ounce in April 2011, its price has fallen by about half and has not managed to bounce back to new highs. The price of gold, on the other hand, has broken its record this year.
After the pandemic, the price of silver has offered traders volatility when trading it in the range between 20 and 30 dollars. Currently, the price of silver is over $32 after it broke the $30 resistance level.
Silver is often referred to as the poor man's gold, due to its more affordable price. Silver offers investors an alternative investment as it acts as a hedge against inflation thanks to its historical value preservation feature.
Silver is actively used in industries such as home appliances and renewable energy, which makes it well positioned to benefit from increased industrial demand.
Like all investments, the price of silver is also affected by the monetary policy measures of the US central bank, the Fed. When interest rates rise and liquidity tightens, money typically flows from the riskiest investments to safer investments, such as the US bonds, which currently offer a decent interest rate of around five percent. However, if the Fed lowers the interest rate and liquidity in the market improves, the flow of money can reverse and this can also support the price of silver.
Right now, the market is pricing in the Fed decrease in the policy rate for September at the earliest. According to Bank of America economists, there is a real risk that the Fed will not cut interest rates until March 2025.
According to the Silver Institute’s latest research report the price of silver will be supported by robust demand which is expected to continue higher than the supply of silver.
According to the report, industrial demand dominated the silver market and it is expected to reach a new record again this year with a growth rate of nine percent. The record demand estimate corresponds to 710.9 million ounces, and the biggest driver of growth is demand for the manufacture of solar panels, which is expected to grow by 20 percent to 232 million ounces.
The report predicts silver jewelry demand to grow by four percent and silverware demand to rise by seven percent during this year, but at the same time investment demand for physical silver is expected to fall by 13 percent.
A trader can position for silver future price movements with Vontobel's leveraged products through brokers operating in Finland.
Vontobel’s TLNG HOPE V386-turbo offers a leveraged product for profit seeking in the rising price of silver futures. At the time of writing, the leverage of the product is 7.28 times, which corresponds to the 7.28 percent return of the leveraged product when the price of the silver future rises by one percent. If, contrary to expectations, the futures price falls by one percent, the leveraged product will incur a loss of 7.28 percent.
With Vontobel's leveraged products, you can aim for a return even in the falling price of silver futures.TSRT HOPE V441-turbo offers at the time of writing a 6.4x leverage to silver futures returns. If the futures price falls by one percent, the leveraged product produces a profit of 5.5 percent. Turbo's value, on the other hand, decreases by 5.6 percent if the price of the silver future rises by one percent.
Vontobel's investment products can be traded during the opening hours of the Helsinki Stock Exchange. When trading leveraged products, the risk of loss increases. Losing the entire invested capital is possible. The underlying silver future is quoted in US dollars, so the yield of the leveraged product also depends on the price changes of the EUR/USD currency pair. Investors bear Vontobel's credit risk when investing in Vontobel's products.