Currently, silver is trading near a record high of Rs. 96,493. It surged by nearly 36% from March to May 2024. Following this surge, silver has remained within a range of Rs. 78,000 to Rs. 95,000 for nearly five months. Following this period of stability, silver has shown signs of a breakout on daily charts and is expected to surpass a price of Rs. 1 lakh in the near future. Now, let's examine the long-term potential of this valuable metal.
In August 2020, silver reached its peak at Rs. 77,949. Following this peak, it entered into a lengthy consolidation period of almost 44 months. After trading within a wide range of Rs. 52,000 to Rs. 78,000, silver began to rise again, hitting a new high of Rs. 78,000 on MCX. During this consolidation phase, silver created a "Cup and Handle" pattern on monthly charts. This pattern suggests that the upward trend in silver is expected to continue until 2027-28.
It's noted that after breaking out of a "Cup and Handle" pattern, assets often experience a long-term uptrend. By determining the depth of this cup, we can estimate the price target of this pattern. Silver formed this pattern between Rs. 51,857 and Rs. 77,949, indicating cup depth of Rs. 26,092. Adding 1x and 2x of this range to the breakout level, we can calculate the price targets. Rs. 77,949 + Rs. 26,092 = Rs. 104,041 can be the first target for Silver. Similarly, Rs. 77,949 + (2* Rs. 26092) = Rs. 130,133 can be the second target for this "cup and handle" pattern.
The aim of this analysis is to highlight the potential for a long-term upward trend in silver prices. Investors can consider a Silver Exchange Traded Fund (ETF) for a 36 to 60-month investment period. This investment strategy could lead to significant returns over the next few years.
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