During the Friday trading session in the US stock market, silver experienced a major outbreak, with COMEX silver futures rising by 6.5% intraday to $33.85 per ounce. Spot silver broke through the $33 mark for the first time since December 2012, surpassing a key resistance level.

During the New York session on Friday, spot silver rose by 6.37% to $33.7162 per ounce, accumulating a 6.93% increase for the week. COMEX silver futures increased by 6.53% to $33.955 per ounce, with a 6.90% weekly gain. In the past six weeks, silver has recorded gains for five weeks.

Despite silver's inability to keep up with gold in recent years, silver has started a 'catch-up trade' with gold this year, evident in May and September. For example, silver outperformed gold in September, with a 9.9% increase compared to gold's 6.2% increase. In October, silver once again outperformed gold, with the upward trend continuing.

Industry experts generally believe that silver appears very cheap compared to gold. Some people think that due to silver's higher volatility than gold, it would not be surprising for silver to significantly outperform gold in the next year.

Silver is a key component of artificial intelligence development, closely related to the trend of AI leader NVIDIA. The demand for industrial and green metals provides strong support for silver, an eco-friendly precious metal. In stark contrast to the strong demand, silver has experienced structural supply shortages for four consecutive years, with inventories continuously decreasing.

This week, London spot gold broke through the $2700 per ounce mark, continuing to hit new historical highs. This year, the gold price has repeatedly hit new highs, even expected to target $3000 within the year.

On Friday's New York session, spot gold rose by 1.07%, to $2721.49 per ounce, rising to $2722.57 per ounce at 04:51 Beijing time hitting a new high, with a total increase of 2.44% this week. COMEX gold futures rose by 1.08%, to $2736.80 per ounce, hitting a historical high of $2737.30 per ounce at 04:17 Beijing time, with a total increase of 2.28% this week.

Last month, Goldman Sachs pointed out in its report that silver is expected to start a 'catch-up trade' with gold, making a long silver position one of the best trades in the current market. The reasons are based on four points:

First, silver is a key component of AI.

Second, silver prices are negatively correlated with interest rate paths and the trend of the U.S. dollar, and the Fed's inclination towards loose monetary policy will have a positive impact on silver prices.

Third, compared to gold, silver has lower holdings and significant room for price improvement.

Fourthly, silver is on the verge of a breakout after several months.

Based on historical data from the loose monetary policy of the Federal Reserve since the early 2000s, generally speaking, for every 25 basis points decrease by the Fed, the gold price will rise by about 6.3%, and silver will also rise.

It is worth noting that in recent weeks, the rise in gold and silver prices has occurred against the backdrop of rising US bond yields, contrary to the tailwind factors mentioned by Goldman Sachs, due to the logic of the weakening of the interest rate cut expectations on US bonds, while at the same time, gold is moving towards a 'Trump trade' restart, with funds flowing into precious metals for safe-haven purposes:

Under the Trump policy framework, fiscal expansion is more severe than Harris, and the sustainability of the deficit is being questioned. An analysis article on the Wall Street News website pointed out that if Europe and the United States continue to expand debt disorderly in the future, gold is likely to become the final safe haven for funds.

According to data released by the US Commodity Futures Trading Commission (CFTC) last Friday,Futures Trading Commission (CFTC)'s latest data shows that investors are significantly reducing their net short positions in US soybean, corn, and wheat contracts, easing bearish sentiment in the market.October 15, the bullish sentiment for gold and silver increased:

• Speculators increased their net long positions of COMEX gold by 9,001 contracts to 235,284 contracts in the week ending October 15; short contracts decreased to 18,356 contracts, hitting a six-week low.
• Speculators' net long positions in COMEX silver increased to 35,532 contracts, while short positions decreased to 12,526 contracts, hitting a three-week low.

Financial and economic blog Zerohedge believes that it is very reasonable to use the call spread of silver to operate in its breakout market. The chart below shows the profit diagram of the call spread for silver ETF SLV with strikes at $31 and $35 in November. Zerohedge's view is similar to Goldman Sachs's back in September.

A call spread refers to buying a call option with a lower strike price and simultaneously selling a call option with a higher strike price. The purpose of this strategy is to profit from price increases, but since a call option at $35 is sold, the maximum profit is limited.