The first half of 2020 was an amazing time for Silver. The price of Silver reached 30 dollars per ounce, a price not seen since April 2013, after more than doubling from the lows in 2020. However, in the second half of 2020 and much of 2021, silver's been seen trading sideways. Now, we're finally seeing a potential for silver to reinitiate its previous uptrend. The Silver future has formed an ascending triangle that has bullish implications if the pattern breaks the upper boundary. The pattern looks extremely attractive, but a technical pattern is not the sole reason for a potential higher silver price.
Silver Future
Ascending triangles are bullish chart patterns that signal for a potential move higher once the horizontal boundary breaks out. If the price of silver can break out of the pattern, we could see it reach 38 dollars based on the measurement rule objective. These are of course rough guidelines.
A hedge against inflation?
Now, we can only speculate as to what silver will do. But unprecedented amounts of global government spending and debt acquisitions make silver rather attractive. The United States, for example, has seen inflation rates reach 4.2 percent, the highest it's been since September 2008, due to a huge surge in demand for commodities as the global economy starts to reopen. Historically, silver has performed really well during these periods of high inflation. We’ve already seen commodities such as lumber and copper skyrocket.
Silver's practical applications
Silver’s becoming an increasingly important metal in the technology and clean energy sector too. This has arguably been at the core of silver’s success in 2020. In the second half of 2020, we saw these sectors performing incredibly well. This has affected the silver price too.
For example, every new gigawatt of solar energy requires 2.8 million ounces or about 80 metric tons of silver. Electric vehicles require silver as well. The metal’s conductivity and resistance to corrosion make it a very important metal for electric vehicles. It is expected that by 2040, 50 percent of silver supply will be used in the electric automobile industry.
Silver definitely looks poised for a move higher. The metal could potentially benefit from several different factors. Whether that factor is economic uncertainty, inflation, or the practical applications of silver, the metal surely looks very attractive.