Bullish signals from a technical perspective have been pairing nicely with strong fundamentals. That bodes well for silver prices moving forward. Even if there are short-term dips in prices, it gives investors an opportunity to buy into the dual-purpose metal.
Strong technical signs and fundamentals, don’t always portend to upside in the metal’s market. Other factors will influence whether investors can witness more upside as other market factors. And interest rates play a role in determining which direction prices will go. Even then, it’s still not a definitive forecast of where prices will head.
“It’s important to consider that silver’s value is significantly influenced by several external factors, such as market dynamics related to bond markets and what they are doing,” wrote Christopher Lewis in FX Empire. “[The] interest rates in America rising would hurt silver. But recently we’ve seen them falling, and that’s exactly what you are seeing in pricing this market. With this, you need to keep an eye on the 10 year yield. Because if it starts to turn back around and rise, that probably puts a significant amount of pressure on the silver market.”
Silver’s dual purpose as a precious metal and industrial metal will also affect demand. Speaking toward the latter, Lewis mentioned that the shift to green energy sources could affect demand, noting that “you have to pay attention to industrial demand, something that of course causes quite a bit of external pressure on the market as silver is used in a lot of the new ‘green technologies.'”
Buying the Silver Dips
Any short-term pullbacks in the precious metal’s prices should provide opportunities for investors to take advantage if adding the metal is an option to diversify portfolios. That said, investors can get exposure to the metal with the Sprott Physical Silver Trust (PSLV). The fund provides exposure to the precious metal without the additional hassle of storing it. The fund invests in unencumbered and fully allocated London Good Delivery (LGD) silver bars.
In addition, shareholders can redeem their shares for physical bullion anywhere in the world (subject to certain minimum conditions). Redemptions of shares do not dilute the trust’s exposure for remaining shareholders still invested in the fund.
Silver and gold prices tend to move in tandem, so another option for investors who also want to mix silver exposure with gold is the Sprott Physical Gold and Silver Trust (CEF). This is a closed-end trust that invests in unencumbered and fully allocated physical gold and silver bullion in LGD bar form. CEF’s overall goal is to provide a secure, convenient, and exchange traded investment alternative for investors who want to hold physical gold and silver without the inconvenience typical of a direct investment in physical bullion.
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