On Friday, during the U.S. stock market trading session, silver experienced a significant surge, with COMEX silver futures climbing 6.5% intraday to $33.85 per ounce. Spot silver broke through the $33 mark for the first time since December 2012, overcoming a key resistance level.

At the end of trading in New York on Friday, spot silver rose by 6.37% to $33.7162 per ounce, accumulating a weekly increase of 6.93%. COMEX silver futures increased by 6.53% to $33.955 per ounce, with a weekly accumulation of 6.90%. Silver has recorded gains in five out of the past six weeks.

Although silver has largely failed to keep pace with gold in recent years, it has initiated a "catch-up trade" against gold this year, a trend that was already evident in May and September. For instance, silver rose by 9.9% in September, outperforming gold, which accumulated a 6.2% increase in the same month. In October, silver once again outperformed gold, with the upward momentum continuing.

It is widely believed in the industry that silver appears very cheap relative to gold. Some argue that, given silver's volatility is much higher than that of gold, it would not be surprising if silver significantly outperforms gold in the coming year.

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Silver is a key component in the development of artificial intelligence and its trend is highly correlated with AI leader NVIDIA. The demand for industrial and green metals provides strong support for this eco-friendly precious metal. In stark contrast to the robust demand, silver has experienced a structural supply deficit for four consecutive years, with inventories continuously decreasing.

This week, London spot gold broke through the $2,700 per ounce mark, continuing to set new historical highs. This year, gold prices have repeatedly hit new highs, and it is even believed that they could target $3,000 within the year.

At the end of trading in New York on Friday, spot gold rose by 1.07% to $2,721.49 per ounce, reaching a historical high of $2,722.57 at 04:51 Beijing time, accumulating a weekly increase of 2.44%. COMEX gold futures increased by 1.08% to $2,736.80 per ounce,刷新ing the historical high at $2,737.30 at 04:17 Beijing time, with a weekly accumulation of 2.28%.

Last month, Goldman Sachs pointed out in its report that silver is expected to initiate a "catch-up trade" against gold, and that going long on silver is one of the best trades in the current market. The reasons are based on four points:

Firstly, silver is a key component of AI.

Secondly, the price of silver is negatively correlated with the interest rate path and the trend of the U.S. dollar. The Federal Reserve's inclination towards easy monetary policy will have a positive impact on silver prices.

[Note: The translation ends abruptly as the original text was cut off. The last sentence in the original text is incomplete and does not provide the third and fourth reasons mentioned.]Thirdly, compared to gold, silver has a lower position, leaving a significant room for catch-up growth.

Fourthly, silver is on the verge of breaking through in the coming months.

Based on historical data from the Federal Reserve's easing cycles since the early 2000s, generally speaking, for every 25 basis point reduction by the Federal Reserve, the gold price tends to rise by about 6.3%, and silver prices also follow suit.

It is worth noting that the recent upward movement in gold and silver prices has been achieved against the backdrop of rising U.S. Treasury yields, which is contrary to the tailwind factors mentioned by Goldman Sachs that push up the prices of gold and silver. This is due to: U.S. Treasuries are following the logic of weakened expectations for rate cuts, while at the same time, gold is following the resumption of the "Trump trade," with funds pouring into precious metals for safe haven:

Under the Trump policy framework, fiscal expansion is even more aggressive than Harris, and the sustainability of deficits is questioned. Analysis articles on the Wall Street Journal website point out that if Europe and the U.S. continue to expand debt disorderly in the future, gold is likely to become the last safe haven for funds.

According to data released by the U.S. Commodity Futures Trading Commission (CFTC) on Friday, in the week of October 15th, the bullish sentiment for gold and silver rose:

Speculators' net long positions in COMEX gold increased by 9,001 contracts to 235,284 contracts; short positions fell to 18,356 contracts, a six-week low.

Speculators' net long positions in COMEX silver increased to 35,532 contracts, with short positions falling to 12,526 contracts, a three-week low.

The financial blog Zerohedge recently believes that it is very reasonable to operate the breakthrough of silver with the bullish option spread (call spread). The following chart shows the profit chart of the call spread of the silver ETF SLV at $31/$35. Zerohedge's view is similar to that of Goldman Sachs in September.

A call spread is the strategy of buying a call option with a lower strike price while selling a call option with a higher strike price. The purpose of this strategy is to profit when the price rises, but the maximum profit is limited because the call option at $35 has been sold.