Weekly Market Recap (Jun. 7) – Silver Price Confirms Its New Floor at $30

Silver Price Confirms Its New Floor at $30
Published on: Jun 7, 2024

Several weeks ago, the silver price broke through the $30 per ounce mark and remained above this level, causing the market buzzing. From a technical analysis perspective, this breakthrough is very significant. Historical trends indicate that once silver prices break through $30 and retest this level, they typically rise to $50 soon thereafter.

On Monday (June 4), silver prices briefly fell below $30. However, Peter Krauth, editor of Silver Stock Investor, stated that this is nothing to worry about. He suggested that even if silver prices dip to $28 or $26, they will eventually rebound above $30. In his view, $30 has become a solid bottom for silver prices and serves as a new launch point for further gains.

In an interview on “METALS 100”, Jan Alston, President and CEO of CMX Gold & Silver (CSE: CXC; OTC: CXXMF), stated that he has been studying the silver market for over a decade, during which silver prices have been suppressed by the futures market. However, supply constraints and shortages have become a new reality, and ultimately, these industry fundamentals will outweigh financial market impacts as the decisive factor for future silver price trends. CMX Gold & Silver Corp. is a junior mining company focused on Idaho’s former producing silver mine.

Regarding the financial markets, Krauth mentioned that despite a four-year silver supply shortage, silver prices have been slow to rise. A significant reason for this is that secondary inventories on futures exchanges and exchange-traded funds (ETFs) have been able to fulfill delivery demands for major silver buyers. However, these inventories are rapidly depleting and could be exhausted within approximately 12 to 24 months.

Speaking of silver inventories, China has a substantial influence on the silver market. The Shanghai Futures Exchange reports that silver inventories are at a 10-year low, and at the current rate, they could be depleted by the end of the year. This reflects China’s robust demand for silver, with the most notable evidence being the consistent 10% premium of Shanghai silver prices over New York prices for the past two months. Prior to this, there was also a sharp increase in the Shanghai gold premium, indicating a large-scale transfer of precious metals from the West to the East.

The silver supply shortage is unlikely to be resolved in the short term. According to the World Silver Survey, this year’s silver deficit will exceed 300 million ounces, driven primarily by the solar panel industry. Two years ago, the industry’s silver consumption was about 100 million ounces, which increased to around 200 million ounces last year, and is expected to exceed 300 million ounces this year.

As for investment opportunities, fund manager and renowned precious metals investor Chen Lin is especially optimistic about silver mines, stating that this sector is undervalued and that silver producers’ stocks are severely undervalued. He believes that gold and silver miners will experience a phenomenal market trend in the coming quarters.

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