Samco Securities: Gold and Silver Bull Forecaster Signals Strong Rise in Crude Oil

Brokerage Samco Securities, which previously mentioned the massive bull run in gold and silver, now believes the next big move could come from the global oil benchmark, arguing that the ‘energy phase’ of the commodities super cycle is beginning to unfold.Apurva Sheth, Head of Market Perspectives and Research at Samco Securities, said the recent recovery of WTI crude from the $55 zone is technically and structurally significant. Commenting, he said the commodity has formed a bullish upper high and higher low structure and is moving towards the $66 mark, with key support around $62 to $63 and a deeper base around $59.

“The relative strength index remains above 50, indicating positive momentum despite near-term volatility. Crude’s current setup looks like a flag consolidation below a descending trendline. A decisive breakout above $66 could open the way to $72 to $73 in the near term,” he said.

“Leadership rotates in a certain order,” Sheth said. Gold tends to move first as liquidity increases and real interest rates peak. Silver and base metals follow as growth expectations improve. The energy sector tends to join later, when industrial momentum strengthens and inflationary pressures increase.

In the current cycle, gold has already staged a powerful rally and silver has been catching up. Now Sheth sees crude oil starting to adapt to that rotation.

While geopolitical tensions, particularly developments between the US and Iran, have contributed to the recent price spike, Sheth believes structural factors make a more sustainable argument. He pointed to the slowing US shale revolution, years of underinvestment in production capacity and a potential increase in demand from countries like China that are rebuilding strategic reserves as long-term tailwinds.

These supply-demand dynamics, combined with tightening technical structures, are at the heart of his bullish thesis.
On the gold and silver rally going forward, Sheth in an interaction with ETMarkets highlighted that the gold-silver ratio had fallen sharply after reaching a support zone around 65 over the past decade, indicating that silver was undervalued against gold.

As silver has outperformed over the past six months, he now sees a possible role reversal, with gold regaining the lead while silver consolidates.

On gold, Sheth has maintained long-term Fibonacci targets ranging from the September 2011 peak to the December 2015 bottom. He reiterated the $2,608, $3,335 and $4,750 extension levels, with a three-year long-term target of $7,040. In such a scenario, silver could trade between $140 and $210 over the same period, based on historical bull run relationships where silver typically trades at 2 to 3% of the gold price.