iM: "Silver Super Rally... Indicates Healthy Liquidity and Economic Conditions"

iM Securities recently stated that silver prices are experiencing a super rally, hitting all-time highs, which indicates that liquidity concerns have eased and the overall economy is performing reasonably well.

On December 1, Park Sanghyun, a researcher at iM Securities, explained in the report "Economic and Financial Markets Unpacked Through the Silver Super Rally," that "during November, silver prices rose by 16% compared to the previous month." As of the closing price on November 28, the price of silver reached $56.5 per ounce, once again setting a new all-time high.

Reuters Yonhap News

First, Park highlighted three price indicators in the US financial market that he had previously emphasized as noteworthy: Bitcoin, big tech credit default swaps (CDS), and the US dollar. He pointed out that these indicators have recently started to stabilize. He explained, "Although the short-term money market stress that triggered the simultaneous decline in major asset prices-the so-called 'everything falling'-has not been completely resolved, signs of stabilization are evident not only in these three indicators but also in government bond yields and credit spreads."

He further noted, "As the previously unstable financial markets and asset prices regain stability, another phenomenon worth noting is the super rally in silver prices," adding, "Since the beginning of this year, silver has outperformed the KOSPI and recorded the most outstanding rate of increase among major assets."

There are several factors behind this super rally in silver. Park explained, "Silver, like gold, is a precious metal and thus has the characteristics of a safe-haven asset. At the same time, it is referred to as the 'vitamin of industry' due to its strong industrial demand." He analyzed that "the super rally in silver prices is driven by a combination of these factors, with both liquidity expansion and debasement (investment strategies to hedge against currency devaluation) trades at play."

Among these factors, industrial demand is particularly noteworthy. Park mentioned that not only silver prices but also the price of copper-known as 'Dr. Copper' for its economic forecasting ability-as well as the Baltic Dry Index (BDI), which is sensitive to economic cycles, have been rising together. He explained, "It is difficult to attribute this solely to liquidity and some shortages in raw material inventories. Robust investment and industrial demand are also contributing factors."

He added, "The expansion of artificial intelligence (AI) investments and AI-related infrastructure spending in major countries, including the United States, has begun to affect the prices of certain raw materials." He assessed that "rather than concerns, these increases in commodity prices reflect the continued strength of the global economic cycle." Additionally, he analyzed that falling oil prices will also have a positive impact on the economic cycle.

Park emphasized, "In summary, the continued super rally in silver prices is primarily a signal that liquidity flows in the financial markets, which had been a source of concern, remain healthy."

This content was produced with the assistance of AI translation services.