Source: Wall Street See

As September comes to an end, the overall performance of the commodity market is good, with silver standing out and prices hitting a nearly twelve-year high.

The upward momentum of silver seems to be continuing. Adam Koos, President of Libertas Wealth Management Group, states that silver has always been a stable "champion" in the market. With easing inflation concerns and a rebound in industrial demand, silver is expected to see a second wave of upward opportunity.

According to data from Peak Trading Research, silver rose by 9.9% in September, outperforming gold, which rose by 6.2% in the same month.

Other commodities such as natural gas, white sugar, and coffee also performed strongly. Natural gas rose by 24% in September, with analysts pointing out that supply constraints and increased demand are the main reasons for its sharp price increase. Some of the demand growth comes from the surge in electrical utilities demand from ai datacenters.

Silver prices hit a twelve-year high, being "very cheap" compared to gold.

Currently, silver prices have climbed to nearly a twelve-year high. Although spot silver fell slightly today, it still remains at around $31.4 per ounce.

Peter Spina, the founder of SilverSeek.com, pointed out that silver currently has "ideal market conditions", which could likely drive its price significantly higher.

He also added that silver has been experiencing structural supply shortages for four consecutive years, with inventories continuously decreasing. In addition, the demand for industrial and green metals also provides strong support for the silver price. Spina stated:

Compared to gold, silver appears very cheap. Currently, it takes over 83 ounces of silver to buy 1 ounce of gold.

The Vice President and Senior Metal Strategist at Zaner Metals also believes that, influenced by global growth risks, although silver has lagged behind in the summer, the "momentum of gold hitting new highs has supported the silver market", with silver starting to catch up with gold's rise in September. He said:

As investors return to the silver market, strong industrial demand supports this most eco-friendly precious metal. I believe that the upside potential for silver is significantly greater than the downside risks. Silver prices currently below $30 per ounce seem very cheap.

Silver funds' long positions surged, with Goldman Sachs expecting silver to start a "catch-up trade".

Due to strong silver demand and continuous supply tightness, coupled with low actual interest rates in the USA and a weak dollar, silver prices have recently shown significant increases.

Recently, Goldman Sachs trader Robert Quinn observed that with continuous fund inflows into gold ETFs, silver's hedge fund long positions are also soaring.

Data shows that before the September Federal Reserve meeting, silver futures position surged. From September 10th to 17th, the silver price rose by 8%, and traders' net positions increased by $2.6 billion, the second largest increase in the past 5 years. After the Fed's rate cut, silver continued to strengthen. From September 17th to 20th, silver further increased by 1.7%.

However, compared to gold, silver's open interest is still relatively low, showing significant upside potential. Goldman Sachs' previous report pointed out that silver is expected to start a "catch-up trade":

Firstly, silver is a key component of the development of artificial intelligence.

Secondly, because the silver price is negatively correlated with the path of interest rates and the trend of the US dollar, the Fed's inclination towards loose monetary policy will have a positive impact on silver prices.

Thirdly, compared to gold, silver has lower open interest, indicating clear upside potential.

Lastly, silver is on the edge of a breakout for several months.

Editor / jayden