$100 Silver Ahead

Being a silver investor over the last few weeks has become more psychologically challenging.

That’s true even for us die-hard silver enthusiasts.

After all silver had a standout 2020, having gained about 47% in its best year since 2010. That easily outpaced gold’s own impressive 25% return.

But the reality is that so far in 2021, silver is down 9%. And meanwhile, nearly all the fundamental market drivers have remained intact. It seems the pressures on silver prices are likely from two angles. The first is after such an impressive 2020, it was due to correct. That’s what bull markets do.

The second pressure point is a rising US dollar index, likely thanks to rising long-term bond yields. However, it’s important to consider that this trend will also run its course and exhaust itself. That could happen naturally, or the Fed could intervene by imposing Yield Curve Control.

But higher yields are a sign of soaring inflation expectations and burgeoning economic activity. And a stronger US dollar, which favors imports over exports, is probably not a favored outcome for central planners.

So patience is the best approach at this point. In my view, the end of this silver correction is nigh.

Embrace Silver Volatility

In a recent report, Bank of America’s commodity analysts indicated they expect to see silver prices averaging $29.28 this year. That’s based on their expectation for a modest supply deficit of 281M ozs. They also point out, "While we expect a rebound in supply this year, output should remain below the peak levels seen a short while back, also because the project pipeline is relatively empty."

The push for green energy combined with massive infrastructure spending, and stalwart investment demand, should keep a bid under the silver price and help it rise again this year.

Although silver is down 9% in 2021 and has retreated 19% since its August peak near $30, that’s certainly well within historical bull market corrections.

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