Bitcoin May Help Silver Outperform Gold Toward $50 Resistance
(Bloomberg Intelligence) -- Silver started February with a distracting spike toward $30 an ounce that quickly reversed, but we see the path of least resistance remaining upward. Rapidly advancing technology and clean-energy trends are tailwinds for the best conductor of electricity, notably vs. gold -- which is facing competition from Bitcoin. (02/05/21)
- Electrification and the Best Conductor -- Silver
Silver Appears Low to Companions Gold, Copper
Akin to the aftermath of the 2008 swoon, we see the 2020 silver price low as a similar flush that cleansed the market for new highs. Uniquely industrial and precious, the white metal is well positioned to sustain its two-year status as one of the best performing commodities, up about 70% to Feb. 4. Our graphic depicts silver likely building a base for advancement in the $24-$30 an ounce range. The 20-month moving average at about $20 has turned decidedly upward and represents an extreme downside level in the event of a global risk-off plunge akin to 1Q20.
Record gold prices in 2020 and eight-year highs in copper at the start of 2021 are companions for advancing silver. The best conductor of electricity in a world of accelerating electrification, decarbonization and digitalization has strong tailwinds for an rising price. (02/05/21)
- Advancing Technology Buoys Silver vs. Gold
Bitcoin Taking Gold Luster, Silver Set to Shine
Silver prices may have a more lustrous future than gold, which is facing rising competition from Bitcoin. In a world going digital, it's becoming prudent for old-guard gold allocators to shift a portion of investable assets toward the benchmark cryptocurrency, notably to cover risks of Bitcoin becoming a reserve asset. Our graphic depicts the gold-to-silver cross rate at about 68 and back near its 20-year mean. Past patterns of reverting from spikes in the cross rate have been beneficial for the silver price.
What's different this time adds to the white metal's advancement potential. Clean-energy technology and electrification mean demand for silver and the metal appears in early days of recovering from an extended bear market. Low prices have reduced investment in production. About 10-12% of silver supply is used for solar. (02/05/21)
Silver prices may have a more lustrous future than gold, which is facing rising competition from Bitcoin. In a world going digital, it's becoming prudent for old-guard gold allocators to shift a portion of investable assets toward the benchmark cryptocurrency, notably to cover risks of Bitcoin becoming a reserve asset. Our graphic depicts the gold-to-silver cross rate at about 68 and back near its 20-year mean. Past patterns of reverting from spikes in the cross rate have been beneficial for the silver price.
What's different this time adds to the white metal's advancement potential. Clean-energy technology and electrification mean demand for silver and the metal appears in early days of recovering from an extended bear market. Low prices have reduced investment in production. About 10-12% of silver supply is used for solar. (02/05/21)
- Silver Squeeze Unlikely to Get $50, But Demand vs. Supply Might
Silver has among the highest prospects vs. the major metals to add to last year's gains, in our view. Unlike gold, demand for the white precious metal is about 50% industrial, which may place it in a unique position among favorable macroeconomic underpinnings and accelerating trends in electrification and decarbonization. The most efficient conductor of electricity is also a very deep market, with established futures and ETF trading, on the back of the physical market going back thousands of years. Our graphic shows silver futures managed-money positions about 23% net long, indicating a short squeeze is out of the question.
It was near the depths of the bear market in 2018-19 that hedge funds were last net-short silver. We see silver as simply following gold's trajectory to new highs, which is about $50 an ounce. (01/29/21)
- 10x Bitcoin-to-Gold Bull-Market Inflection Point
Bitcoin's potential to become a reserve asset in a world going digital is a prime price support. In addition to the fact that traditionally focused gold allocators are at increasing risk if Bitcoin succeeds, there's ample evidence of funds moving to the crypto from the metal. Our graphic depicts accelerating flows into Grayscale Bitcoin Trust (GBTC) as they decline in total known ETF holdings of gold. At almost 700,000 Bitcoins, GBTC is reaching record highs, while gold ETFs have dropped to about 107 million ounces from the October peak just above 111 million.
In dollar terms, GBTC at around $22 billion is about 10% of the $210 billion tracking-gold ETFs (Feb. 2). At the start of 2020, the GBTC market cap was closer to 1% of gold. GBTC is the largest Bitcoin tracker. (02/03/21)
- Silver in Deficit on Demand Recovery, Less Supply
Investor's silver appetite may improve in 2021, with demand set to be dominated by industrial applications -- usually topping purchases. The decline in 2020 volume is a reflection of coronavirus-led supply-chain disruptions, with jewelry demand potentially recovering in 2H. Mined output probably fell 5% year-over-year to 798 million ounces in 2020, with a 0.3% drop in recycling volume to 169 million ounces, based on Metals Focus data, with the supply side hit by the pandemic.
Global silver demand (including exchange-traded products) in 2020 could more than offset supply contraction, in our view. Metals Focus forecasts another deficit year at 105 million ounces. Total 2020 investment demand (physical plus ETPs) may have peaked at 336 million ounces, up 25% vs. 2019, pushing global silver needs toward 1.1 billion ounces. (02/01/21)
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