Investors stay positive, as experts believe the rise in U.S. money supply can push silver and gold to new highs.
The yellow metal market manages to keep firm support around $1.950 per ounce even despite the volatility we have been seeing recently. On the one hand, the asset shows enough strength to keep traders positive. On the other hand, some analysts say it may need more powerful factors that will drive the metal to new highs.
Over the last 3 years, precious metals have been showing low results. They actually underperformed other general commodities. What we see now is the precious metal market stuck, while the majority of market [participants are mainly concerned with the further tightening of the US monetary policy. The situation is also affected by the lower money supplies that dropped quite sharply.
The good news is that we might be at the end of the tightening market and restrictions imposed by the FED. In simple words, the tightening cycle is about to complete. So, it can be only a matter of time when gold and silver will take their positions back stepping into a larger commodity super-cycle. Investors expect the Federal Reserve to start pumping money back into the economy to prevent it from sleeping into the recession phase.
If so, investors will no longer be interested in saving in cash. As too much money means devaluation. It will definitely trigger the long-term run in gold, silver and other commodities. The rally is about to start in the next 3 years.
While market participants find themselves in quite an unstable environment, investors have become extremely sensitive to every change including the massive deficit spending. The golden rule here is when people start losing confidence in their currency they keep focus on purchasing something more powerful and stable. This is when gold and silver can be in the limelight.
Last not least, the US market can experience a severe meltdown as the country approaches November's elections. It can also drive the yellow metal to new highs as well as further US economy deterioration
May the trading luck be with you!