JJP - The Silver Market And Interest Rates

2023-03-27 05:52:36 ET

Summary

• Monetary policy can have a significant impact on the silver market as a currency.
• Monetary policy can affect interest rates, inflation, and investor sentiment, all of which can influence the demand for and price of silver.
• Silver prices over the last 30 days have been influenced by a range of factors, including inflation concerns, US Federal Reserve policy, the Omicron variant of COVID-19, and industrial demand.

Monetary Policy

Monetary policy can have a significant impact on the silver market as a currency, as changes in monetary policy can affect interest rates, inflation, and investor sentiment, all of which can influence the demand for and price of silver. Here are some of the ways that monetary policy can affect the silver market as a currency:

1. Interest Rates: Central banks often use interest rates to manage inflation and economic growth. When interest rates are low, it can increase the attractiveness of holding silver as an investment, as the opportunity cost of holding silver is lower. Conversely, when interest rates are high, investors may be more inclined to hold assets that provide a higher yield, which can put downward pressure on silver prices.

2. Inflation: Inflation can erode the value of a currency over time, and silver is often seen as a hedge against inflation. When inflation is high, investors may turn to silver as a way to protect their wealth and hedge against the impact of inflation.

3. Currency Depreciation: When a currency depreciates in value, it can increase the demand for silver as an alternative currency or store of value. This is because silver is seen as a finite and tangible asset, which can retain its value even if a currency is losing value.

4. Investor Sentiment: Changes in monetary policy can also influence investor sentiment, which can have a significant impact on the demand for and price of silver. For example, if monetary policy is seen as supportive of economic growth and stability, it can increase investor confidence and lead to increased demand for silver. Conversely, if monetary policy is seen as uncertain or risky, it can decrease investor confidence and lead to decreased demand for silver.

Overall, monetary policy can have a significant impact on the silver market as a currency, as changes in interest rates, inflation, currency depreciation, and investor sentiment can all influence the demand for and price of silver. Traders and investors should stay up-to-date with the latest monetary policy developments and adjust their strategies accordingly.

Silver 30-Day Review

Over the last 30 days, silver prices have experienced some volatility, with fluctuations driven by a range of factors. Here are some of the key events and factors that have influenced silver prices during this period:

1. Inflation Concerns: Concerns over inflation have contributed to increased demand for silver, as investors look for ways to protect against the impact of rising prices.

2. US Federal Reserve: The US Federal Reserve's decision to accelerate its tapering of bond purchases and potentially raise interest rates sooner than expected has put upward pressure on the US dollar, which can put downward pressure on silver prices.

3. Omicron Variant: Concerns over the impact of the Omicron variant of COVID-19 on the global economy have contributed to market uncertainty and increased demand for safe-haven assets like silver.

4. Industrial Demand: Silver is used in a range of industrial applications, and demand for these applications has been strong in recent months. This has contributed to increased demand for silver and supported higher prices.

In summary, silver prices over the last 30 days have been influenced by a range of factors, including inflation concerns, US Federal Reserve policy, the Omicron variant of COVID-19, and industrial demand. As of March 25, 2023, silver prices were trading at around $23 per ounce, which is relatively stable compared to the previous month. Traders should stay up-to-date with the latest market developments and adjust their strategies accordingly.

Let's take a look at the weekly standard deviation report published in the Marketplace section as Mean Reversion trading and see what short-term trading opportunities we can identify for next week.

SILVER: Weekly Standard Deviation Report

Mar. 25, 2023 10:38 PM ET

SUMMARY:

• The weekly trend momentum of 22.12 is bullish.
• The weekly VC PMI of 21.95 is bullish price momentum.
• A close below 21.95 stop, negates this bullishness neutral.
• If long, take profits 23.94 - 24.53.
• Next cycle due date is 3.30.23.

Weekly Trend Momentum

The report indicates that the silver futures contract closed at 23.34, and the market is currently showing bullish momentum. The market has closed above the 9 SMA of 22.12, which confirms the weekly trend momentum is bullish. A close below the 9 SMA would negate the weekly bearish short-term trend to neutral. This suggests that traders may want to consider buying into the silver futures contract while the bullish trend momentum persists.

Weekly Price Momentum

The report also notes that the weekly price momentum is bullish, unless the market closes below 21.95. This suggests that traders may want to wait for confirmation of a bearish price momentum before entering into short positions on the silver futures contract.

Weekly Price Indicator

The price indicator suggests that traders may want to take profits on shorts into corrections at the Buy 1 and 2 levels of 22.52 - 21.69, and go long on a weekly reversal stop. If long, traders should use the 21.69 level as a Stop Close Only and Good Till Cancelled order. Traders should look to take profits on longs as we reach the Sell 1 and 2 levels of 23.94 - 24.53 during the week. This provides traders with specific price levels to target when entering or exiting positions.

Finally, the report notes that the next cycle due date for the silver futures contract is March 30, 2023. Traders should be aware of this date, as it may impact market sentiment and price movements.

Overall, the report provides traders with useful information on the silver futures contract, including confirmation of bullish trend momentum, bullish price momentum, specific price levels to target for taking profits, and an upcoming cycle date to be aware of. Traders should consider this information when making trading decisions on the silver futures contract.

Disclaimer: The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed herein constitutes a solicitation of the purchase or sale of any futures or options contracts. It is for educational purposes only.

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