Silver To Push To $22 An Ounce, Drive Gold Higher - Bloomberg Intelligence

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Jim Wyckoff

Article From Kitco News

Friday August 16, 2019 15:44

(Kitco News) - A rally in silver could be the next catalyst that drives gold prices higher, according to one market analyst.

In research notes released this week, Mike McGlone, Bloomberg Intelligence senior commodity strategist, voiced his bullish outlook for silver. He said that he sees potential for prices to push to $22 an ounce.

“The elevated gold-silver ratio and its potential for reversion favors advancing silver,” he said. “With gold unchanged near $1,500 an ounce, revisiting the mean would imply a silver price near $22 an ounce.”

However, it won’t be an easy ride higher. McGlone noted that silver, currently at above $17 an ounce, is trading at an important pivot level. “If prices don't sustain above $17, the indication would be failure,” he said.

September silver futures last traded at $17.155 an ounce, up 1% for the week.

McGlone added that with the gold rally looking overextended in the near-term, it could now be silver’s time to shine and lead the precious metals complex.

McGlone said he is watching investor demand for silver and gold-backed exchange traded funds very carefully. In a report Friday, he noted that silver ETF demand has reached a record high.

“The 10-week rate-of-change in silver holdings at about 20% to Aug. 15 is the sharpest gain since the height of the financial crisis in 1Q09,” he said. “That spike in silver ETF inflows preceded the price launch to the 2011 high close of $48.44 an ounce.”

While silver is unlikely to retest its 2011 all-time highs, McGlone said that it’s not much of a long shot for gold. He said that gold ETF flows are still about 6% from their all-time highs.

“It appears only a matter of time before this apex is breached, if silver is a guide,” he said. “The yellow metal is only about 20% below its peak. Unless the trend reverses in ETF inflows, it should be a matter of time for new highs in the gold price.”

Ultimately, McGlone remains bullish on gold and silver as the Federal Reserve is expected to start a new easing cycle amid economic uncertainty. He added that this environment should continue to weaken the U.S dollar, a bullish factor for gold and silver.

“With the Federal Reserve finally joining global central banks in a move to accommodation, the trend is unlikely to end until true currency-type debasement inflation surfaces,” he said.

 

By Jim Wyckoff

For Kitco News

 

jwyckoff@kitco.com

www.kitco.com



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals IncThe author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

 

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