How High Will Silver Go? / Commodities / Gold & Silver 2020

The torrid rally in thesilver market reached a major milestone this morning as prices hit $21/oz.

On Monday, the silverspot price tracked by Money Metals Exchange closed at $20.12 (thefutures market price settled at $20.19).

That marks the firstabove-$20 close for silver since 2016.

The white-hot silver marketis busting through some resistance levels that should clear the way for higherhighs ahead. Silver prices traded up Tuesday morning to $21.21 oz.

How high will silverultimately go?

Technical traders believethat a decisive break above $21 will send silver zooming up to $26 over arelatively short period of time. If silver breaks above $26, then prior highscome into play, including the all-time high around $49.

In terms of U.S. dollars,there is no particular upper limit since the currency is under a continuousdevaluation campaign. The value of the dollar might only depreciate at about 2%per year as “targeted” by the Federal Reserve.

Or it could at some pointbegin to depreciate a much more rapid pace, sending silver and other hardassets much higher in nominal terms.

Silver could, however,become overvalued in real terms – that is, too expensive relative to otherassets including gold, copper, real estate, and stocks. It could happen downthe road… but not anytime soon.

It was only four months agothat silver was fetching a historically cheap price in real terms. It tradedits largest discount to gold on record and its lowest level relative to thestock market in a generation.

Since then, silver has shotup 75% – from just under $12/oz to $21. That near-vertical rate of ascent can’tbe sustained in perpetuity. The market will eventually have to pull back andcool off before re-launching into a new upleg.

However, investors who arehoping to be able to accumulate more silver at lower prices won’t necessarilyget that opportunity. The market could well spike to $26/oz on momentum buyingbefore suffering any significant retracement.

When silver crossed above$20/oz four years ago, it didn’t stay up there for long. Some additionalback-and-forth between bulls and bears could be in the cards before sub-$20silver is finally a thing of the past.

The good news for bulls isthat there appears to now be strong support within the former resistance zoneof $18.50-$19.75/oz.

When that range is viewedfrom the perspective of downside potential versus a long-term upside target atthe former all-time high of $49.50/oz, buying silver in the low $20s stillrepresents a favorable risk/reward opportunity.

Of course, many silver bugsare eying triple-digit prices in the bull market ahead. Silver couldconceivably hit $100, $150, or even higher levels on fears of physicalshortages or a currency crisis.

One thing that isguaranteed in the silver market is volatility. Riding out swings in silverprices is like saddling up on a wild, untamed horse. It will try to throw youoff at every turn.

The classic TV series “TheLone Ranger” featured a hero who rode on “the thundering hoofbeats of the greathorse Silver.” Famously, the Lone Ranger would intone, "Come on, Silver!Let's go, big fellow! Hi-yo, Silver! Away!"

Silver investors who areable to hang on to their position – and add to it when opportunities present –will be saying “Hi-yo, Silver!” too as prices move to higher highs.

The Lone Ranger carriedactual silver bullets as symbols of his steadfast pursuit of justice against evildoers. Similarly,gold and silvercoins are symbols of the justice of sound money against the evilsperpetuated by politicians and bankers who control the fiat monetary regime.

Unfortunately, justice inreal life is complicated and often elusive. The bad guys aren’t alwayspunished, and the good guys don’t always win.

What will win outultimately is economic reality. The forces of supply and demand are much likethe immutable laws of nature.

Some investors will benefitwhile others will get hurt from the price trends ahead. If unprecedented levelsof government stimulus and Federal Reserve currency creation begin to producehigher rates of price inflation without generating real economic growth, thenstagflation could be a portfolio killer for conventional stock and bondallocations.

If stagflation contributesto rising safe-haven demand for precious metals – which are currently facingsupply challenges thanks to COVID-related shutdowns of mines and refineries –then physical silver could prove to be an ideal portfolio diversifier.

We’ve already seen some ofsilver’s explosive price potential exhibited this year. Even bigger moves arelikely still to come.

Stefan Gleason isPresident of Money Metals Exchange, the national precious metals company named 2015"Dealer of the Year" in the United States by an independent globalratings group. A graduate of the University of Florida, Gleason is a seasonedbusiness leader, investor, political strategist, and grassroots activist.Gleason has frequently appeared on national television networks such as CNN, FoxNews,and CNBC, and his writings have appeared in hundreds of publications such asthe Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2020 Stefan Gleason - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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