Silver - The Rising Star in the Gold Bull Market?

Similar to gold price, silver price has been rising since March this year, going from $22.657 per ounce to $27.43 on May 9, representing a 21% increase. Since the outbreak of the US banking crisis, the global economic recession risk has risen, potentially putting pressure on industrial base metals and further boosting precious metals' prices. The International Silver Association predicts a significant increase in global silver demand, reaching 1.2 billion ounces in 2024, which will be the second-highest level in history, potentially driving prices to the highest point in a decade.

Why is the price of silver rising?

1. Traditional Store of Value: Both silver and gold are considered safe-haven assets. Recent geopolitical tensions between Iran and Israel have led investors to seek alternative assets, driving up silver prices.
   
   
   
2. Industrial Impact: Apart from its value as a store of wealth, silver ranks high in terms of electrical and thermal conductivity among all metals. It has widespread industrial applications, including in the semiconductor and solar panel industries. Approximately 60% of newly mined silver is used for industrial purposes, compared to only about 10% for newly mined gold. Silver tends to be more volatile than gold during industry fluctuations and inflation, making it perform more strongly during economic crises.
   
   
   
3. Benefiting from Rate Cut Expectations and Strong Demand: Interest rate cuts generally lead to increased value for precious metals and non-income assets (such as Bitcoin). Holding these assets becomes more attractive compared to cash, bonds, or income stocks due to reduced opportunity costs, resulting in higher silver prices.
   
   
   
4. Positive Correlation with Gold Prices: When the market turns sour and demand for safe-haven assets increases, investors typically buy gold first, driving up gold prices. When gold is perceived as too expensive, investors may turn to relatively cheaper silver as an alternative, thus boosting silver prices.
   
   
   
5. Other Factors Affecting Silver Prices: Factors such as a weakening US dollar, declining real interest rates, and reduced silver production can contribute to higher silver prices. Industrial demand also plays a role; during economic downturns, manufacturing industries may reduce capacity, leading to decreased demand for silver and lower prices.

Silver-Related Products:

Silver Margin Trading: Leverage allows investors to amplify gains or losses. It involves using a small amount of margin to establish contractual relationships for silver trading. The entire investment process does not involve physical possession or delivery of the commodity (e.g., silver).

1. Long Position (Buy): Investors expect silver prices to rise and enter a long position (buy).
2. Short Position (Sell): Investors expect silver prices to fall and enter a short position (sell).

Profit Calculation for Silver Contracts:
Profit or loss = (Number of contracts × Contract unit) × (Selling price - Buying price)

Assuming the silver price is $25, and you buy one silver contract with a unit of 5,000 ounces:

Example 1: If you sell at $26, your profit will be $5000 + $5000 = (1 × 5000) × ($26 - $25).

Example 2: If you sell at $24, your loss will be $5000 - $5000 = (1 × $5000) × ($24 - $25).

Note: The above examples are for reference. To calculate the full profit or loss, consider any additional costs you may incur, such as overnight financing fees, commissions, or guaranteed stop-loss fees. For details, please contact our customer service hotline at (852) 8206 2500.

Eunify App – Trade Anytime, Anywhere

EFSG's Eunify trading app allows risk-free simulation of margin trading. Unlike other platforms, investors earn points for each real trade, redeemable for rewards, enhancing investment returns.

Download Eunify from the App Store or Play Store and easily register for a simulated account using your phone and email!