Silver prices have hit a record high of $86.23 per troy ounce, with a daily increase of nearly 7.50%. This surge follows the indictment of Federal Reserve Chair Jerome Powell, raising worries about the Fed’s credibility and its policies. The rapid climb in silver prices has pushed the Relative Strength Index (RSI) into overbought territory, though momentum remains strong. The key price targets are $86.50 and $87.00, while $85.50 serves as short-term support. Silver is a valuable asset used to diversify investments or protect against inflation. It can be traded physically or through financial vehicles like Exchange Traded Funds (ETFs). Several factors influence silver prices, including geopolitical instability, interest rates, the performance of the US Dollar, and industrial demand. Silver is less expensive than gold and is widely used in electronics and solar energy, with significant demand from the US, China, and India. Silver typically tracks gold’s price movements because both are considered safe havens. The gold/silver ratio helps assess their relative values; a high ratio may suggest silver is undervalued, while a low ratio may indicate gold is undervalued. After Powell’s indictment, we are seeing a sharp increase in implied volatility. This is a crucial time for traders in derivatives, as the costs of options on silver ETFs have skyrocketed, reflecting uncertainty about the Fed’s future. Traders should prepare for large price fluctuations and adjust their strategies accordingly. The sharp rise has pushed the RSI deep into the overbought range, indicating the rally may be excessive. We advise caution in chasing the recent 7.5% gain and suggest using call options to target a move toward $87.00 only after a possible pullback to the $85.50 support level. This offers a better entry point rather than buying at the peak. With gold priced at $4,600 and silver near $86, the gold-to-silver ratio has fallen to around 53.5. This is well below the average of over 80 seen in early 2020s, indicating silver’s recent rise has outpaced gold. A mean reversion may occur in the coming weeks. In addition to its safe-haven qualities, silver benefits from strong industrial demand. Reports from late 2025 by the International Energy Agency noted a 30% growth in global solar panel installations, a trend expected to continue this year. This provides a firm foundation for silver prices, even if political excitement calms down. We expect major silver producers to take advantage of this price increase to hedge their future production. Look for increased selling pressure in the futures market as miners secure these historically high prices. This hedging could create notable resistance around the $87.00 mark. The ongoing uncertainty about Fed leadership will not be resolved soon, meaning volatility is likely to persist in the coming weeks. For those anticipating a significant price change but uncertain about the direction, buying a straddle may be a good strategy. This allows traders to benefit from major price moves, whether up or down, before options premiums decrease.

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