Despite the risks to the global economy from the conflict in Iran, the silver market is attracting renewed interest from investors as prices remain above the 80 USD/ounce mark, amid growing expectations that silver may soon reach the 90 USD/ounce mark.
Positive sentiment appeared after silver prices opened the week with a strong increase of about 7%, pushing prices to the highest level in 9 weeks near the 87 USD/ounce mark. Although the market recorded technical profit-taking pressure in Tuesday's session, silver still maintained most of the previous gains. The nearest spot silver price traded around 84.99 USD/ounce, down about 1.15% during the day.
According to some experts, the current developments of silver are somewhat contrary to the general market environment when inflationary pressure is causing many central banks to maintain a cautious monetary policy stance, thereby increasing the opportunity cost for non-performing assets such as gold and silver.
In addition, concerns related to normal global economic growth can also affect silver demand in the industrial sector.
However, many experts believe that there are still fundamental factors that continue to support the silver market even in a volatile environment. In which, the prolonged supply-demand imbalance is considered an important driving force to boost silver prices and investment cash flow.
Last month, the Silver Institute released the annual Silver Survey report by Metals Focus, forecasting that the global silver market will be short of about 43 million ounces this year. This will be the sixth consecutive year the silver market has fallen into a supply shortage.
Ms. Barbara Lambrecht - Commodity Analyst at Commerzbank - believes that weakening basic metal production this year could further widen the silver shortage.
According to her, the energy crisis related to the Iranian conflict is affecting the production of basic metals – a sector where silver is often mined as a byproduct.
The momentum for the relative strength of silver, which is more heavily influenced by industrial demand than gold, is likely to continue to come from the industrial metals market," she said.
Mr. Simon-Peter Massabni - Business Development Director at XS. com believes that the current silver price movement reflects the market's strong revaluation of this precious metal under the impact of structural factors.
In my opinion, these factors no longer play a secondary role but have become the main driving force to reshape the position of silver in the global financial system, not only as a valuable asset but also as a multi-dimensional strategic asset," he said.
Mr. Massabni believes that prolonged supply shortages will force silver prices to increase to rebalance the market.
In addition, the change in the global economic environment is also helping silver gradually escape the "shadow" of gold and affirm its own role as a currency metal.
According to him, the decrease in the gold/silver ratio from a record high to a more balanced level reflects the re-evaluation process of investors, in the context that more and more people see silver as an asset with higher profit potential in an uncertain environment.
He believes that silver possesses a rare characteristic when it is both a precious metal and plays an industrial role, helping this metal have an advantage in complex economic cycles.
In addition, rising global public debt and prolonged geopolitical tensions are also driving cash flow to alternative assets such as silver.
Even if high interest rate expectations create short-term pressure, I think this impact will not be enough to change the major trend of the market," Mr. Massabni said.
In my opinion, the current issue is no longer whether silver will continue to increase or not, but how long that upward momentum can last in a world that is increasingly volatile and more dependent on strategic resources.
