Why was the silver targeted? Analysts indicate a movement in the price of silver

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(Kitco News) Silver was targeted, for some reason, by the new wave of investors in social networks this week, according to a group of analysts, who also identified the precious metal as the best performer for 2021.

“Silver is our main favorite,” Metals Daily CEO Ross Norman told the LBMA web journal.

The choice to target silver was not a big surprise, given that silver has already begun to receive the attention of a wider audience, just before the #silversqueeze phenomenon triggered by Reddit.

“Even before prices rose, we saw it in the last week. Investors have been more friendly with silver, given its industrial properties,” said UBS precious metals strategist Joni Teves.

And even if this new interest does not immediately translate into higher prices, it will appear in the medium and long term. “Silver has the potential to outpace gold in an environment where industrial demand is expected to recover,” Teves said.

Silver has attracted a wider audience, partly because it is more profitable than gold and partly because people understand silver better, said Jim Steel, HSBC’s chief precious metals analyst.

“Silver has been open to this. We have a more real interest in silver. It has been driven by social media,” Steel said. “If you look at the liquidity of silver, it’s thinner than gold, but deeper than stocks being pushed higher. Also, silver doesn’t have the same short positioning as some stocks did. That’s why we’re starting to see the retreat.”

Analysts see silver trading above $ 30 this year with or without the social media trend, Standard Chartered executive director at Precious Metals Research Suki Cooper said. “Investors are coming back in silver. They see a higher risk,” Cooper said.

The social media trend also revealed how liquid the silver market is, she pointed out.

“It’s a well-stocked market, with more than a year of inventory. Which we could see some difficulty in the short term if part of the retail industry starts to unload,” Cooper warned.

Also, the more to the green energy is more a long-term game for silver, which will ultimately have a positive impact on prices, Cooper added.

According to the webinar, the outlook for gold remained high, but no less optimistic.

“There is a strong correlation between buying gold-backed ETFs and price. We are unlikely to achieve a record level of ETF buying again this year,” Steel said. “We have continued QE, with a light monetary policy stretching to 2021. We have a lot of fiscal spending. But this is nothing new for the market.”

Steel said gold will remain high, but is unlikely to load aggressively higher.

“We have enough there to keep the market afloat, but how far we can go is questionable,” he said. “It’s easy to forget that historically, these are still very high prices.”

The US dollar will continue to play an important role for gold, which could provide a trigger for rising prices, Cooper said.

“The strongest correlation of gold is with the dollar,” she said. “The downward trend in the US dollar is likely to resume, given the blue barrier. We expect higher fiscal spending, rising inflation expectations, and real yields remain negative.”

However, in the short term, consolidation is still the most likely outcome, Cooper said.

The physical gold market will remain essential, as it provides a cushion for prices when investor demand slows.

“In India and China, we are starting to see demand start to stabilize. For India, apart from high prices, one of the challenges has been less interest on a general retail basis. The reduced customs duty this week is very favorable and will help consumer interest return in 2021, ”Cooper said.

Physical demand for gold remains a weak point in the outlook, Steel said.