Silver breaks above $30/oz milestone, poised for best settlement in 11 years
May 17, 2024 11:25 AM ET
By: Carl Surran, SA News Editor
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Silver prices surge past $30/oz for the first time intraday since early 2021, poised to finish at its highest level in more than a decade, in a rally that is running harder and faster than gold with both metals enjoying a major boost from strong financial and industrial demand.
Gold and silver prices also are supported on signs that inflation may be slowing down, raising the prospect of interest rate cuts in the coming months.
Silver also is a beneficiary of the meme stock mania, with speculators looking for areas to exploit, "and silver is usually the one they favor," Phil Streible, chief market strategist at Blue Line Futures, told Bloomberg.
"There's three things that impact a commodity: supply, demand, and price momentum," Streible said, and silver "has all three of those right now."
The breakthrough above $30 may trigger substantial ETF buying activity that may raise the risks of a silver squeeze, particularly with the renewal of the meme stock theme, according to TD Securities commodity strategist Daniel Ghali.
At 11:20 a.m., July Comex silver ( XAGUSD:CUR) was +3.4% at $30.895/oz, its highest intraday level since February 2013, while June gold ( XAUUSD:CUR) traded +1.2% at $2,414.10/oz.
ETFs: (NYSEARCA: SLV), ( PSLV), ( SIVR), (NYSEARCA: SIL), ( SILJ), ( GLD), ( GDX), ( GDXJ), ( IAU), ( NUGT), ( PHYS), ( GLDM), ( AAAU), ( SGOL), ( BAR), ( OUNZ)
Silver has surged 29% YTD, but in relative terms to gold, silver is still cheap: It currently takes ~80 oz of silver to buy one ounce of gold, compared with the 20-year average of 68.
The gold-silver ratio was above 90 in January, and analysts at Citigroup say the ratio could drop to ~70 if the Federal Reserve proceeds with interest rate cuts and economic growth stays strong in this year's H2, although they warned that a slowdown would push the ratio in the other direction.
The silver market is headed for a fourth year in deficit, with this year's shortage seen as the second biggest on record, according to the Silver Institute.
Silver stockpiles tracked by the London Bullion Market Association fell to the second lowest level on record in April, while the volumes at exchanges in New York and Shanghai are near seasonal lows. |
