Investment Risks and Considerations

The information shared includes possible risks and uncertainties. The markets and instruments mentioned are for informational purposes only and are not investment recommendations. It’s important to do thorough research before making any investment decisions, as investing in open markets carries risks, including the potential loss of capital. The accuracy of the information provided is not guaranteed and should not be taken as investment advice. We believe that raising the silver price target to $39 creates a great opportunity for traders in derivatives to think about buying call options. The Silver Institute recently reported that global demand for silver is expected to reach 1.2 billion ounces in 2024. This would be the second-highest demand ever, driven by strong industrial use. This strong demand supports a positive outlook for silver in the coming weeks.

Platinum and Palladium Market Conditions

The Gold/Silver ratio has dropped from over 90 earlier this year to around 78 now, showing silver’s recent strength. Over the last 20 years, this ratio has averaged closer to 60, indicating that silver has a lot of potential to outperform gold. This relative value makes taking long positions in silver, possibly hedged against short positions in gold, an appealing strategy. For platinum, the new target of $1,350 suggests that traders should look into bullish positions using long-dated futures or bull call spreads. One important factor is that platinum is increasingly being used instead of palladium in automotive catalysts. The World Platinum Investment Council predicts a supply deficit of 418,000 ounces for 2024. This supply-demand mismatch supports a likely rise in price. Given the expectations for palladium to underperform, we suggest being cautious about taking long positions. Instead, consider protective put options. The market is experiencing challenges from the shift to electric vehicles and the increased use of platinum, creating a structural surplus for palladium. This suggests that palladium prices may not keep pace with other precious metals. The overall market environment, with growing expectations for interest rate cuts from the U.S. Federal Reserve later this year, offers strong support for these trades. Lower interest rates often weaken the dollar and reduce the cost of holding non-yielding assets. This macroeconomic situation strengthens our positive outlook for the precious metals market. Create your live VT Markets account and start trading now.

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