Should you Invest in Silver?

 Silver price is trading at the 2years low in the US as well as Indian markets.

During the week, the price hit the low of $17.40 per ounce on COMEX and Rs.51,857 per kg on MCX (Multi Commodity Exchange).

The commodity markets witnessed a cool-off in 2022 after the stellar rally in 2021. Though industrial metals witnessed a stellar rally, precious metals have been quiet and facing pressure during the retracement phase of the commodity cycle.

I believe, it's not yet over for the commodity supercycle and we may witness the second round of bullish trends by end of 2022 or the start of 2023.

Should you buy Silver?

Yes, you should, but at what price?

While investing in commodities, timing and levels are important factors.

COMEX Silver Weekly Price Chart

Let’s start with the COMEX weekly chart first as we are the follower of the US Silver price.

Since the trendline breakout in July 2020 at $18.50, the price of silver rallied to $29.86 in four weeks, the happy bulls 😚

The pandemic and lockdown fear witnessed the flows in precious metals but as soon as equity markets reversed, investors realized the risker, but rewardable money is in equities.

The precious metals witnessed an unwinding from October 2020 and the money flew back into equities making Silver the dead investment. And it is proved right too.

The price fell below $18 now retesting the breakout levels.

The horizontal trendline marked at $18.50 and the retest zone at $17 indicates the demand zone.

MCX Silver Weekly Price Chart

The silver price on the MCX chart has broken the key support area (red horizontal line) at Rs.58,000 and it fell below Rs.52,000 now.

The price may fall towards Rs.48,500-49,000 where the long-term demand zone is placed (orange horizontal line).

In the lower panel, RSI (Relative Strength Index) on the weekly chart is trending around the oversold zone with positive divergence. The price has hit a new low while RSI hasn’t is an indication for bulls to look for an accumulation in the asset.

Investors should grab the opportunity with both hands in the range of Rs.55,000-49,000 for 12-18months.

Buying Silver in the physical market (local jewelers) is always preferred by Indian investors but they can also explore the Silver Exchange Traded Fund (ETF) offered by Nippon and ICICI Prudential. Both have their own advantages and disadvantages.

Be Greedy when others are Fearful.