Silver prices shoot higher and we might not be done yet!

Published date: 30/01/2019
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Like its big brother gold, silver has been rallying in recent times as the pace of QT (quantitative tightening) looks like it may be slowing. Looking at the weekly chart it's clear to see the price has broken some important levels.

Today silver is 0.50% higher and it has been noted by some analysts that a shortage of the white metal could be the cause. Demand is set to be higher than production for the seventh straight year. This coupled with the Fed slowing down its rate hiking path and uncertainty from the US-China trade war pushed silver to have its best month (Dec) in almost two years. 

According to some mining sources, 26,000 tons of silver is expected to be produced this year. That could be the least since 2013, and also means global physical demand will again top output. Potentially that could take the precious metal to the mean value of the high consolidation at $17/oz. Global uncertainty also means that miners are not expanding their operations which is leading to a supply freeze.

Today there is a key risk event as the FOMC meet for their latest rate decision. They are not set to raise rates but comments are in focus as the market are looking to find out if they are set to take their foot off the gas in regards to reducing their balance sheet. A clear break and retest of the $16/oz level would be a bullish signal but if the stock market rallies there is also a chance we could see a pullback from higher levels.

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