Commodity Market Review: Investors Take a Shine to Silver

Summary: Investors Take a Shine to Silver

  • Global economic uncertainty along with expectations of interest rate cuts have increased the price of precious metals.
  • There is a disconnect between the price of gold and the price of other precious metals.

Gold

As global economic uncertainty endures, investors are continuing to turn to safe haven assets, or assets that retain their value, such as gold. According to the International Monetary Fund, trade tensions are having a larger than expected negative effect on the economy. In its World Economic Outlook, the IMF reported that real global economic growth will slow to 3.2% this year – .1% slower than forecasted. 

On the other hand, according to the Commerce Depart, US economic growth slowed less than expected, making the Fed less likely to dramatically cut interest rates. The US Federal Reserve is widely expected to decrease rates by at least 0.25% at its July 30-31 meeting. Lower interest rates decrease the opportunity cost of holding gold because it has no yield.

Overall, gold rose over the fourteen day period of the forecast by 1.05%. I Know First was correct in forecasting a positive future for the gold commodity.

Silver

Like gold, silver is a safe-haven asset that investors turn to during economic uncertainty. Federal Reserve interest rate cuts will also boost silver prices because silver can compete better with yield-bearing assets when interest rates are low. Silver prices are on track for their best monthly performance since December and are at their highest level in more than a year. 

While gold has reached a six-year high rising 11.3% year-to-date, investors have largely ignored silver. Now, investors are looking for cheaper alternatives to gold. Edward Meir, a consultant at INTL FCStone states, “There was a disconnect between gold and silver prices,” but now “there’s been a relative value rotation into silver.”

Silver is also used in manufacturing. Previously, prices for silver were not growing quickly due to fears of global economic slowdown. However, silver is a major component of semiconductors, which are facing improving demand. As a result, silver is growing as well.  Silver rose 8.24% over the past fourteen days, in line with I Know First’s bullish outlook.

Platinum

Like silver and gold, platinum is a precious metal, so expectations of Federal Reserve interest rate cuts have increased the growth of palladium because lower interest rates decrease the opportunity cost of holding commodities, which carries no yield. Furthermore, continuing economic uncertainty also fuels platinum’s growth.

Furthermore, like with silver, investors are turning to platinum because of the disconnect between the price of gold and the price of other metals. 

Over the past three days, from July 26th, 2019 to July 29th, 2019 ^JPLAT grew by 3.24%. Thus, I Know First correctly selected ^JPLAT as a commodity with a bullish future.

I Know First Forecast Performance: Investors Take a Shine to Silver

On July 26th, 2019 the I Know First algorithm issued bullish predictions for commodities for a 14 day time horizon. The predictions included XAU (gold), and XAG (silver) with a positive signal of 0.40 for XAU and 0.15 for XAG, and with a predictability indicator of 0.26 for XAU and .27 for XAG. Over the 14 day trading period from 12th July to 27th July, XAU gained 1.05% and XAG rose by 8.42%, in good agreement with the I Know First forecast. This bullish commodities forecast was sent to the current I Know First subscribers on 12th July, 2019.

On July 26th, 2019 the I Know First algorithm issued bullish predictions for commodities for a 3 day time horizon. ^JPLAT (platinum) had a positive signal of 0.27 and a predictability indicator of 0.17. Over the 3 day trading period from 26th July to 29th July, platinum gained 3.24%, in good agreement with the I Know First forecast. This bullish commodity forecast was sent to the current I Know First subscribers on July 26th, 2019.

Algorithmic Stock Forecast: The table is a commodities forecast produced by I Know First’s algorithm. Each day, subscribers receive forecasts for six different time horizons. Note that the top 10 commodities in the 1-month forecast may be different than those in the 1-year forecast. In the included table, only the relevant commodities have been included. The boxes are arranged according to their respective signal and predictability values (see the link for detailed definitions). A green box represents a positive forecast, suggesting a long position, while a red represents a negative forecast, suggesting a short position

Please note – for trading decisions, use the most recent forecast.Get today’s forecast and top commodities picks.

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