FX Street - Silver Market Alert: Powerful Bullish Setup Takes Shape

Article by Stefan Gleason in FX Street

The silver market appears to be setting up for a big move.

After spending this spring stair-stepping lower in a narrowing range, silver prices have formed a falling wedge pattern. That pattern usually resolves in a powerful directional breakout. The good news for bulls is that falling wedges usually break out to the upside.

Let’s therefore drill down into silver’s fundamentals.

The Silver Institute is widely considered to be an authoritative source. The Institute released its annual World Silver Survey in April, which showed global silver demand rose by 4% in 2018 to more than 1 billion ounces. At the same time, supply from mine production fell 2% last year to 855.7 million ounces.

These numbers present a compelling case for higher silver prices. Demand appears to be outstripping supply.

There ultimately will be a physical shortage if demand continues to rise while mining production falls. The market’s way of averting such a shortage is through higher prices to incentivize more output and encourage thrifting by industrial users.

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