Silver is currently stabilizing, yet individual investors continue to show strong confidence - Amplify ETFs

Silver Market Update: Consolidation Phase and Bullish Outlook

Following a dramatic surge earlier this year, silver has shifted into a period of consolidation. Despite this pause, the overall optimistic outlook for silver remains, bolstered by strong interest from retail investors, according to a leading fund manager.

During a conversation with Kitco News, Nate Miller, who serves as Vice President of Product Development at Amplify ETFs, observed that even with increased volatility in precious metals, retail participants are not showing signs of distress or panic selling.

“We’re not hearing concerns from our clients,” Miller explained. He acknowledged that while investment inflows have decelerated, investor sentiment has largely held steady.

Investors familiar with the precious metals sector recognize that silver often lags at the start of rallies but can accelerate rapidly once momentum builds. “Silver might not be the first to move in a rally, but it tends to reach new highs the fastest,” Miller said, referencing the sharp price spike to record levels seen in January.

Miller also noted that when silver prices dropped sharply last month, Amplify observed buyers entering the market during the initial decline. The $70 price range has seen increased two-way trading, yet overall, net inflows have remained positive throughout the year.

Key Drivers Supporting Silver

According to Miller, the fundamental outlook for silver is robust, underpinned by two main factors: a persistent supply deficit due to industrial demand, and ongoing investment interest driven by safe-haven buying and efforts to diversify away from the U.S. dollar.

However, Miller suggested that the market is more likely forming a new foundation rather than gearing up for an immediate rally.

“It appears we’re establishing a new support level, likely between $70 and $80, and are currently in a consolidation phase,” he commented.

Despite his cautious approach, silver has recently gained traction as geopolitical tensions have increased demand for tangible assets. The spot price of silver was last reported at $90.46 per ounce, marking a nearly 4% rise for the day.

Market Outlook and Future Catalysts

Miller anticipates that this period of consolidation will allow for price discovery and a reduction in speculative activity. He believes there is potential for another upward move in the future. He also pointed out that options market activity remains tilted toward call options, indicating that investors are positioning for further gains.

Looking forward, Miller emphasized that the next significant move for silver will be influenced by the Federal Reserve, especially as markets adjust to potential changes in leadership. While earlier expectations leaned toward a more accommodative Fed, recent statements from officials suggest that interest rate hikes remain possible in light of strong economic data.

For now, Miller expects a period of indecision in monetary policy, which could keep silver trading within a range through the summer months. Should another rally occur, he believes it is more likely to happen in the latter part of the year.