Is global liquidity tightening with strong dollar + high US bond interest rates?

The battle between American retail investors and silver seems to have come to an end.

Silver prices fell back quickly after breaking the $30 mark on Monday, Feb. 1, and are now below $27, down more than 10% from their highs.

However, according to precious metals trading platform Gold Core, there are still seven reasons to support silver prices to continue to rise.

1. The price of silver has reached a turning point.

Gold Core believes that the price of silver against other assets has reached a turning point, especially the ratio of silver to the world stock market and the M2 money supply in the United States.

At present, the price of silver is rising relative to the MSCI World Stock Index, and the ratio of silver to the M2 money supply in the United States has also reached a turning point.

two。 Real interest rates remain low

The central bank's focus on economic recovery and massive monetary stimulus have led to a sharp decline in real interest rates (real interest rates = nominal interest rates-inflation).

Gold Core believes that real interest rates in the United States, which are already negative, will continue to decline in the foreseeable future due to rising inflation.

Historically, precious metal prices have been negatively correlated with real interest rates, meaning silver and gold prices will rise as real interest rates fall further.

3. Central banks of advanced economies will continue to buy government debt

Gold Core predicts that asset purchases in the world's major developed economies are likely to continue until at least 2022.

It also predicts that central banks such as the Federal Reserve may take measures to control the yield curve to prevent longer-term government borrowing costs from rising.

As central banks buy more assets, the currencies of these economies will depreciate further, boosting demand for gold and silver as monetary assets.

4. Industrial demand will increase

Gold Core believes that the reopening of Western economies and large-scale production of renewable energy will boost demand for solar panels in the automotive industry and other industrial uses.

Solar photovoltaic is crucial to future silver demand. A recent report by the world bank predicts that silver consumption in energy technologies may grow sharply to more than 50% of the current total silver demand by 2050.

5. Demand for jewelry and silverware will increase

Gold Core believes that as retail stores reopen, consumer demand for consumer goods, including jewelry and high-end household products, will increase.

What's more, in the United States, because many families have extra savings, they are more likely to consume high-end jewelry and silverware.

6. For disinfection and medical purposes

The pandemic in the new library has increased research on silver for disinfection and medical purposes.

Over the past few decades, silver has been widely used in wound dressings to prevent infection.

In addition, silver ions can effectively kill bacteria, fungi, viruses and algae, and its effect is more lasting than that of medical alcohol.

Although the amount of silver used in health care is measured in milligrams, after the outbreak, the world may further study the use of silver in this area, so the demand for silver in the medical industry is very high.

7. The supply of silver ore is reduced.

According to Silver Institute, silver mine supply will be 6.3 per cent lower in 2020 than in 2019. This is because in many countries, many mines have to be closed temporarily because of the epidemic.

The continuing novel coronavirus epidemic and the ensuing blockade may also limit the supply of silver mines in 2021.