Silver price hits new low since year 2010. The trend for silver price is bearish (potentially moving lower) as you can observe from this chart:
According to Investopedia, this is known as descending triangle. The descending triangle is recognized primarily in downtrends and is often thought of as a bearish signal.
If we zoom out and take a look at the longer term of silver price movement, the similar pattern can be observed as following:
During this period, many investors took advantage of the low price to buy physical silver.
Take the one of the most famous silver coins – American Silver Eagle, the sales for 1oz coin in 2nd half of 2014:
- July – 1.9 million oz
- August – 2.0 million oz
- Sept – 4.1 million oz (breakdown as following)
- 1st to 25th Sept : 1,700,000 oz
- 26th Sept : 700,000 oz
- 29th Sept : 350,000
- 30th Sept : 1,357,000 oz
- Oct – 2.5 million oz (at the point of writing this), where
- 1st and 2nd of Oct : 1,650,000 oz
If we put this into perspective, from 26th Sept to 2nd Oct (5 business days) there are total of 4.1 million oz of American Silver Eagle sold. That is just for 1 coin!
Silver investors are buying on physical silver as there is a clear disconnection between the physical demand and spot price.
These are some of the reason why physical silver investors believe in physical silver and took advantage over the low price.
- Global electronics demand.
- Global jewelry demand, especially in Asian.
- Global industrial demand (it is expected to grow 5% per year through 2016 and outpace global GDP growth).
- The number of new industrial applications.
- The number of new bio-medical uses.
- Photovoltaic (solar) demand.
- Volume on the Shanghai Futures Exchange, which already surpassed the COMEX in 2013.
- Perth Mint sales were 41.6% higher in August than July, and September sales were the 3rd highest of the year.
- Domestic demand in China, which is expected for the first time in history to exceed 250 million oz in 2014.
- Gold/silver ratio (getting close to five-year high).
- The difference between price and the cost of production.
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