SMM Network News: since September, the silver market has changed abruptly. With the arrival of the second wave of COVID-19 epidemic peak, silver prices have gone straight down instead. Recently, the upward trend formed since March this year has been undermined with an all-out effort, and the logic of the risk aversion market driven by the epidemic is being severely tested. As the market gradually digests the expectation of the spread of the second wave of the epidemic and weakens confidence in economic recovery, Shanghai Bank, which has a higher commodity attribute, is not as likely to get more price support as gold, and it will take a long time for bulls to regain strength after establishing a weak trend after the adjustment wave.
The disastrous 2020 is destined to change human life. Novel coronavirus did not disappear naturally as experts expected, but became a resident disease similar to influenza. The bullish market for precious metals that began in late July was the price expectations of investors, and sure enough, the number of new cases in European countries soared by more than 10,000 a day, and the number of hardest-hit areas skyrocketed. At the moment, the impact of the financial attributes of silver is magnified to the highest state, especially the explosive growth of the price of gold drives the price of silver all the way up by comparing the price of gold and silver. for a while, the bulls of precious metals reached the peak price, setting a new high in seven years. This is the worst time for the economy, and of course it is the best time for risk aversion.
However, when the time node arrives in late September, risk aversion type risk aversion funds basically enter the market, and the pessimistic expectations caused by the epidemic have been fully reflected by rising prices, and the damage caused by the second wave of the epidemic is difficult to further worsen. The obvious weakening of the relevant hype logic makes it difficult to sustain the subsequent entry of new funds, and the price trend is bound to be weak. The author expects that the epidemic will still be in a high incidence state in the fourth quarter, but it is a small probability event to exceed the second wave and reactivate the silver investment attribute at the same time, and the risk factor can no longer be over-interpreted.
As we all know, the global distribution of mineral resources of silver is relatively scattered, the overall industrial chain and the situation of supply and demand are relatively close to industrial products, production is relatively stable, but consumption fluctuates greatly with the economy (regardless of investment attributes here). Therefore, the biggest variable in the analysis of the market is to dig into the field of consumption. Different from gold, which is also a precious metal, silver consumption accounts for the first place in industrial demand (60%), mainly because the photovoltaic and electronic and electrical industries need it to be widely used in downstream products, as for other areas such as photography, jewelry, silver coins and jewelry, either it can be grouped into investment demand, or it is difficult to have enough influence on total consumption, so I believe that investors have found the key to decode the market at this point in the discussion.
According to the National Bureau of Statistics, solar power generation grew by 2.1% in August 2020, just from negative to positive, while the growth rate of industrial power generation above scale reached 6.8% in the same period, and the overall recovery rate of the photovoltaic industry was significantly lower than expected. The electronics and electrical industry is even more bleak, with sales of color TV sets, refrigerators, air conditioners and washing machines falling 3.7%, 8%, 14.2% and 16.2% respectively in August 2020 compared with the same period last year. A bleak future makes it difficult for manufacturers to expand production to drive silver consumption.
From a macro and fundamental point of view, it is difficult for silver prices to have a sustained good performance for a period of time in the future, with the most pulsating market, and the weak oscillation is the main theme of the next stage. the only variable in the future black swan event rekindles its financial attributes so as to dominate the next round of market, which is impossible to find at present. Technical analysis silver prices have just gone through triangulation to choose a downward direction, under the background that bears are completely dominant, there are only sporadic opportunities for bulls to choose from. In addition, the long-term rise in the weekly K-line and monthly K-line in urgent need of chips is also another major incentive for this round of adjustment, so the current short order is obviously less risky. Investors are advised to bounce back to an empty order on the 10th line in Shanghai Bank 2012, which is also near the upward trend line, and profit expectations can be set at twice the stop loss.
