Why Did Silver Rocket 6.5%? Gold to Record High

Growing fears and China announcing historic stimulus to boost the property sector caused silver to soar. Platinum joined the fanfare, and gold performed an aggressive breakout.

The price of silver has seen dramatic fluctuations over the decades. In the late 1970s, silver experienced one of its most famous price surges. The Hunt brothers, wealthy oil tycoons, attempted to corner the silver market, driving prices from around US$6 per ounce to nearly US$50 per ounce in January 1980. However, this surge was short-lived as regulatory changes and market realities caused prices to plummet back down.

In the following years, silver prices remained relatively low, oscillating between US$5 and US$10 per ounce throughout the 1980s and 1990s. It wasn't until the early 2000s that silver began to climb again from growing industrial demand and renewed investor interest. This upward take-off made major headlines April 2011, when silver briefly rose to nearly US$50 per ounce again, driven by concerns over the global economy and a rush into physical assets.

The 2020 bull run for silver was like an electric shock to the market, waking it up and sending the price on a rapid increase that had not been seen for a decade. Since then, silver has been maintaining strength, but mostly just moving sideways.

Silver's Weekend Breakout

The recent news out of China, compounded with the expectation of inevitable easy money (rising global liquidity) has just allowed silver to break out above the range it has been stuck in for nearly four years. The industrial metal is expected to have a dramatic increase in purchases to meet China’s needs. There have also been growing fears about market stability around the globe which is evident from increased gold demand as well. This recent price movement in silver leaves it rocketing out of a very strong price ceiling and looking toward potential higher targets. Silver's all-time high is still more that 58% higher than its current USD price.

Gold Record High

Gold/USD closed the week at $2,414.50, marking a new all-time high. We covered gold's technical analysis last week showing that it was flirting with a potential breach of a major resistance level. That breach just occurred, leaving gold with no resistance levels at all. It will be up to the invisible hand to decide when gold decides to stop rising.