Sliver Remains Bullish with Investment on Call

WikiFX News (29 Aug) - The spot silver has increased 115.86% since the years low on March 18. According to UBS SDIC, silver remains bullish in the terms of the U.S. dollar index and inflation expectations.

According to Zou Lihu, fund manager of UBS SDIC Silver Futures Fund, the dollar index and inflation expectations are key factors affecting the trends of silver prices, while the core pricing logic is its properties as a metal.

Zou held that in the medium and long term, the greenback is highly likely to suffer depreciation with the dollar index deepening its loss; while from the perspective of inflation, future markets may have large chance to see the inflation or even stagflation as transmission effect may be stronger with the FED achieving the same effect of loose monetary policy by printing money. These two factors will support the future silver.

He added that, investors should observe the correlation among the gold-silver ratio, copper prices, crude oil prices and PMIs as the ratio usually tends to fall along the ascent of copper and oil.

Zou suggested that, investors should place a long-term view on silvers cyclical nature. From the perspective of short-term influencing factors, investors should pay attention to the pandemic updates which directly affect economic development; secondly, eyes should turn to the FED interest rate meeting in September with the assessment of monetary policy and the control of the yield curve particularly under the spotlight.

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Chart: Spot Silver 5-Year Trend