Three causes for silver's increase
The strongest arguments in favour of silver in June 2023 are:
Dedollarization: Since the end of World War II, the U.S. dollar has served as the global reserve currency. The primacy of the U.S. dollar in the global financial system is threatened by the division of the nuclear powers since February 2022. China is driving efforts to create a BRICS currency that may compete with the supremacy of the dollar. Since the U.S. dollar serves as the pricing benchmark for silver, gold, and the majority of other currencies, de-dollarization that results in a weaker dollar promotes higher commodity prices, and silver is no exception.
Interest rates: Since March 2022, rising U.S. interest rates have raised the cost of maintaining and financing long commodities holdings. From 0.125%, the short-term Fed Funds rate increased.
in March 2022 to 5.125% in May 2023 as the central bank tightens monetary policy in an effort to combat inflation. Quantitative tightening has also increased rates for future maturities, adding to the upward pressure on rates. Commodity prices have been impacted by an environment of rising interest rates. The trajectory of rate increases is slowing in the interim. Over the following months, demand for silver may rise as traders and investors get used to the present environment, which is still marked by the greatest inflation in decades.
Technical buy indications for silver are provided by two technical factors: the pattern of higher lows since September 2022 and the lower highs in the silver-gold ratio.