The Silver’s Long-term Bullish Trend

As real interest rates have remained near all-time-lows, silver and gold have stagnated for nearly a year.  Silver is a store of wealth and has some industrial uses, giving it economic value. 

Silver is more abundant than gold and generally seen as less attractive. However, it also has greater industrial demand. It is a critical component in renewable products such as electric vehicles. 

It is more sensitive to economic fluctuations, particularly in the global manufacturing sector. Moreover, it is less economically sensitive than base metals like iron, copper, and nickel,  but is far more sensitive than gold. 

Silver and gold prices depend greatly on the inflation outlook and real interest rates, which are the rates paid on a risk-free investment less the inflation outlook. It is the real economic return of a risk-free investment. 

Russia is now holding more value of Gold in its reserves than US Dollar. The country reduced its dollar holdings by nearly 50% within the last three years. 

The US owns some 8,133 tonnes of Gold. The official number of China’s holding is lower, estimated to be roughly 14,500 tonnes. 

At recently reduced prices in the Silver market, Silver seems to be a good insurance play for wealth preservation, with a closer inspection of the monthly chart providing compounding evidence of the long-term bullish trend in Silver. 

In Last Week’s Market

Most of the commodities  in non-Agro segment were under pressure during Tuesday’s trading. Gold prices managed to recover, while crude oil and base metals traded weak on demand concerns  and weak equity indices. 

On Wednesday, bullion prices traded firm, with spot gold prices at COMEX trading near $1,805 per ounce.  The weak Asian equity indices also supported bullion prices, which are expected to trade sideways to downwards  for the day. 

Precious metals were fluctuating ahead of the U.S.  Federal Reserve meeting. 

Crude Oil prices also traded firm on Wednesday. Benchmark NYMEX WTI crude oil prices traded 0.68% up near $72.14 per barrel. 

Expectations of bullish weekly inventory data drove crude oil prices to trade higher and the peak summer season has helped. 

On Tuesday, the  API report showed a draw of 4.7 MB last week.  For the day , crude  oil prices are expected  to trade sideways to upward.

On Wednesday, base metals prices traded steady. Most of the metals pared some previous losses. Copper and Nickel prices traded firm on a strong demand outlook, falling in inventories. Base metals may trade sideways to upward for the day.