Key Takeaways
- Silver price rallied 15% since bottoming on March 10.
- Experts see more gains ahead for XAG, along with gold.
- Bitcoin’s correlation with XAG has improved.
YEREVAN (CoinChapter.com) – Spot Silver (XAG) declined 1% to $23 an ounce on March 28, two days after establishing a local peak near $23.50. That is the precious metal’s highest level since the $24.5 peak in early February 2023.
It is up nearly 15% since bottoming out at $20 on March 10.
Silver Could Rise 30% in 2023
Notably, Janie Simpson, managing director at ABC Bullion, told CNBC in January that spot silver could climb up to $30 an ounce in 2023, its highest value in a decade and a 30% advance from the current price.
Additionally, Silver is in a shortage, according to Nicky Shiels, head of metals strategy at precious metals company MKS PAMP. She noted significant drawdowns in available physical stocks held in New York and London’s physical hubs, “more so than seen in gold.”
Shiels also expected Silver will post deficits of more than 100 million ounces during the next five years, with industrial demand – nearly half of the total demand – sparking the tight supply, Shiels said.
Also read: Gold Run Returns as ETFs and ETCs Witness Amazing Inflows amid Banking Crisis
Wheaton Precious Metals President Randy Smallwood agreed with the supply shortage claims, noting that silver supply generally does not respond quickly to demand changes because silver mines supply “only ~25% of the total.”
Meanwhile, the supply of Silver from mine production in 2022 totaled 843 million ounces – still below the decade’s peak of 900 million oz in 2016.
XAG Joins’ Gold Rush’
Notably, XAG climbed in tune with gold, spurred on by heightened demand. The latter peaked near $2,010 an ounce on March 20 but declined 2.5% since, trading at $1,960 per ounce on March 28.
Mike McGlone, the Senior Macro Strategist at Bloomberg Intelligence, underscored the importance of the recent rally, noting that “when the macroeconomic seas get rough, gold has been a lasting safe haven.”
Given the instability of the US banking system, the domino effect of the massive bank run from Silicon Valley Bank, and the Credit Suisse fiasco, investors seek to hedge their funds and turn to hard assets, such as gold and Silver.
Moreover, the prospects of the precious metal sector reaching new heights were evident to many experts, even before the US banking crisis. Thus, while the global market turbulence will continue into 2023, Silver and gold prices are primed for new peaks above $30 and $2,000 per ounce, respectively.
Also read: Bitcoin Price Loses Momentum And It’s Vulnerable to a Drop Below $27K.
Meanwhile, the data from crises of the previous decade shows the correlation between silver and Bitcoin strengthening.
Bitcoin and Precious Metal Correlation During Market Stress
As seen in the chart below, the monthly correlation between Silver and Bitcoin was inverse during the Cyprus banking crisis of 2013. Additionally, the inverse correlation continued throughout the crisis in Greece in 2016, albeit showing signs of improvement.
After 2018, however, Bitcoin and Silver established a more stable positive correlation, including the latest US banking crisis. Given the erratic correlation between the two assets, a BTC rally following Silver is not a given.
However, historical evidence suggests that Bitcoin and argent metal are increasingly connected in the global economy.
