Silver Soars to Fresh 7-Year Highs

Silver climbed to its highest levels since April 2013 in early trading on Wednesday, while gold rose to new record highs above $2,000 an ounce. The move comes after July’s 34% rally, marking silver’s largest monthly gain since December 1979. Rising industrial demand, massive stimulus from central banks and their safe-haven status has helped drive precious metals higher in recent months.

Silver’s industrial usage which includes electronics and solar panels is also helping to increase demand. Politicians around the world have promised a “green recovery” from the COVID-19 crisis. In July, Joe Biden announced a plan to spend $2 trillion over four years to increase the use of clean energy.

Democrats have called for a $3.4 trillion stimulus package which has been rejected by Republicans. Another large US stimulus bill could weigh on interest rates and the US dollar, further supporting precious metals such as gold and silver.

Meanwhile China/US tensions remain strained over a range of issues, including from trade, the Coronavirus, the South China Sea and Hong Kong’s autonomy. Last week, China ordered the closure of the US consulate in Chendu in response to Washington’s order for the Chinese consulate in Houston to be shut. Geopolitical uncertainty related to US/Sino relations has underpinned safe havens such as precious metals. On Wednesday the global Coronavirus death toll passed 700,000. Fears of a second wave continues to weigh on risk appetite among investors.

Looking at the silver monthly chart above we can see that price has risen to the 38% retracement level of the downmove than began in April of 2011. The 50% retracement level at 30.68 represents major potenitial resistance above.