With Christmas headed our way, silver bells could be ringing for bullish traders by year’s end, according to certain market experts who track the precious metal. The prospect of less rate hikes could give precious metals like silver more strength in 2020.
“In a report published Wednesday, Philip Newman, director at Metals Focus, in conjunction with the Silver Institute, said that although silver prices are down from September’s three-year highs, the market remains comfortable above the price range seen at the start of the year,” a Kitco news report by Jim Wyckoff stated. “Newman added that heading into year-end his firms expect average silver prices to be 3% higher than last year.”
Positive Silver Effects
Aside from Fed policy, fundamentals in the demand for silver could also positively affect prices.
“[The trade wars’] negative impact on silver demand, has been mitigated by higher silver loadings, especially in the all-important automotive sector,” said Newman. “In addition, silver consumption in the photovoltaics sector has also grown as more countries push ahead with renewable energy projects in 2019.”
“However, uncertainties remain for Q4 and the direction global supply takes will be dictated by the restart of disrupted operations and key mines achieving grade targets,” he added.
With the U.S.-China trade war still a ways from being resolved, that could also feed into silver strength.
“This metal should be easily absorbed by investors as rising macroeconomic uncertainties and fresh monetary easing by major central banks rejuvenated the appeal of safe haven assets from mid-2019 onwards which, looking ahead, should continue to benefit precious metal prices,” he said.
Traders looking to play the price movements in silver can look to leveraged 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).
USLV seeks to replicate, net of expenses, three times the S&P GSCI Silver index ER. The index comprises futures contracts on a single commodity. The fluctuations in the values of it are intended generally to correlate with changes in the price of silver in global markets.
AGQ seeks daily investment results that correspond to two times (2x) the daily performance of the Bloomberg Silver SubindexSM. The fund seeks to meet its investment objective by investing, under normal market conditions, in any one of, or combinations of, Financial Instruments (including swap agreements, futures contracts, and forward contracts) based on the benchmark. The types and mix of Financial Instruments in which the fund invest may vary daily at the discretion of the Sponsor.
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