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Silver may have
been part of the Bretton Woods agreement, but today Silver is as much an
Industrial Metal as it is a precious metal. Industrial usage accounts for
over 40% of all usage, as Silver is a common element in switches and
electrical devices due to its conductivity. Demand from flatware and
jewelry accounts for over 28% of normal yearly usage, while photographic
usage accounts for 20%. Coins and collectables make-up the rest.
The key factor to
understanding Silver is understanding its demand schedule, as this commodity
is demand driven. When Jewelry, Industrial, and photographic demand
coincide prices rise – November to March. However, when demand is weak in
multiple sectors – such as April, May, June, and August – prices tend to
decline.
* Past performance is not
necessarily indicative of future results. See disclaimer below for further
details.
The major bullish
months in Silver are Marc, July, and September when demand from all three
sectors begins to increase. It is during these months that wholesale demand
increases pressuring prices higher. However, the late spring/early summer
period (April through June), August and October periods tend to see the
worst performance as demand slackens after initial supply builds and normal
lower usage rates.
Just like in the Gold
market, price precedes demand; traders should look for rallies before
historical weakness as an opportunity to establish short positions, while
weakness ahead of usual periods of strength should be used to establish long
positions in the Silver market. |
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