Silver set to soar on surging inflation [Video]

Giles Coghlan LLB, Lth, MA Financial Source

Last Friday markets were shocked by the latest inflation print showing that inflation in the US was continuing to track higher. Investors are now growing more and more concerned that inflation may be here to stay like it did in the 70s when inflation averaged over 7% for a decade. The greatest inflationary pressures have been seen across essential items like food, transportation, and housing. In a high inflationary environment, gold and silver prices tend to gain. So, will silver move higher over the next few weeks on inflationary fears encouraging commodity buying?

Silver has a strong period ahead from June 24 through to September 04. Over the last 15 years, prices have gained nine times and fallen six times. The largest gain has been a huge 54.34% and the average gain has been 6.74%. Will silver shine again this summer?

Major trade risks: If the Fed hikes more aggressively than the market is expecting that could result in some near-term pressure to the downside in silver with a strong USD. However, be aware that the normal yield, and USD, the correlation may break down.

Learn more about HYCM

Author

Giles Coghlan LLB, Lth, MA

Financial Source

Giles is the chief market analyst for Financial Source. His goal is to help you find simple, high-conviction fundamental trade opportunities. He has regular media presentations being featured in National and International Press.

Markets move fast. We move first.

Orange Juice Newsletter brings you expert driven insights - not headlines. Every day on your inbox.

Editor's Picks

EUR/USD falls toward 1.1700 on broad USD recovery

EUR/USD turns south and declines toward 1.1700 on Wednesday. The US Dollar gathers recovery momentum and forces the pair to stay on the back foor, as traders look to USD short-covering ahead of US inflation report on Thursday. However, the downside could be capped by hawkish ECB expectations.

GBP/USD trades deep in red below 1.3350 after soft UK inflation data

GBP/USD stays under strong selling pressure midweek and trades below 1.3350. The UK annual headline and core CPI rose by 3.2% each, missing estimates of 3.5% and 3.4%, respectively, reaffirming dovish BoE expectations and smashing the Pound Sterling across the board ahead of Thurday's BoE policy announcements.

Gold clings to moderate daily gains above $4,300

Following Tuesday's volatile action, Gold regains its traction on Wednesday and trades in positive territory above $4,300. While the buildup in the USD recovery momentum caps XAU/USD's upside, the cautious market stance helps the pair hold its ground.