Precious metals like silver got a nice bump after U.S. president Donald Trump was released from the hospital after testing positive for the coronavirus. That said, with the pandemic still a wild card and the presidential election forthcoming, is there more upside ahead for silver prices?
“In this situation, traders increase purchases of riskier assets and get rid of safe haven assets like the U.S. dollar,” wrote Vladimir Zernov in FX Empire. “If the U.S. Dollar Index gains more downside momentum, silver will get additional support. Weaker U.S. dollar is bullish for silver as it makes it cheaper for buyers who have other currencies.”
When it comes to price action in silver of course, traders will be focused on the technicals. In particular, it leads back to that $24.15 price level and whether it can break through that resistance.
“Silver is trying to get above the nearest resistance level at $24.15,” Zernov added. “In case silver manages to settle above this level, it will gain more upside momentum and head towards the major resistance level at the 50 EMA at $24.65. RSI is in the moderate territory so there is plenty of room to gain upside momentum in case the right catalysts emerge.”
“If silver moves above the 50 EMA at $24.65 and the 20 EMA at $24.75, it will head towards the next material resistance level at $25.85,” Zernov added. “On the support side, the nearest support level for silver is still located at $23.30. If silver manages to get below this support level, it will head towards the next support at $22.30.”
ETF investors looking to get in on the silver action can look to funds like the iShares Silver Trust (SLV) and the Aberdeen Standard Physical Silver Shares ETF (SIVR), two of the largest ETFs backed by holdings of physical silver:
- SLV seeks to reflect generally the performance of the price of silver. The Trust seeks to reflect such performance before payment of the Trust’s expenses and liabilities. It is not actively managed. The Trust does not engage in any activities designed to obtain a profit from, or to ameliorate losses caused by, changes in the price of silver.
- SIVR seeks to replicate, net of expenses, the price of silver bullion. The shares are backed by physically allocated silver bullion held by the custodian. All physical silver held conforms to the London Bullion Market Association’s rules for good delivery.
For those looking for leverage, they can look to ETFs like the VelocityShares 3x Long Silver ETN linked to the S&P GSCI Silver Index ER (NasdaqGM: USLV) and the ProShares Ultra Silver (NYSEArca: AGQ).
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