Silver Price: Are Today's Declines An Opportunity?

Wednesday, September 7, 2016

silver bars

Silver has been incredibly fun to watch throughout the year. Of course, we all know that in the beginning of the year and for the first half, the price of the white metal continued skyward. However, the second half of the year hasn't been so friendly, that is, until US economic data recently sent the metal up once again. Nonetheless, today we're back to declines. Consequently, there's one big question out there. Are today's declines an opportunity? Below, we'll talk about why the price of silver was trending upward, why it's down today, and what we may expect to see from the precious metal ahead.

Following Silver's Price Throughout 2016

As mentioned above, the year 2016 has been incredibly interesting for those who have been following silver. In the beginning of the year, a Chinese Market crash sent the price of the precious metal soaring. This was followed by global economic concerns that helped to continue lifting the price of the white metal.

However, as we moved into the second half of the year, things started to change. Economic reports out of the United States proved to be overwhelmingly positive in the month of July. Not to mention, stimulus in China, the UK and other areas around the world seemed to be taking hold, thus relieving economic pressure. With all of this in the backdrop, and the idea of a Federal Reserve rate hike in the forefront, the price of silver started to fall.

The roller coaster ride continued with yet another change in direction recently. Recently, the United States non-farm payroll report was released, showing that the US economy may not be doing quite as well as expected. According to the report, the United States only added 151,000 jobs to its economy in the month of August. This was a big miss from economists’ expectations of 170,000 jobs - and an even bigger miss from the crucial line drawn at the 200,000 mark. As a result, investors believe that the Federal Reserve will likely delay increasing its interest rate yet again. This mixed with opinions that the US economy isn't doing quite as well as we thought is leading to gains in the price of silver.

Why We're Seeing Declines Today

While most recent movement has been upward, silver is giving up some of the recent gains today. However, I'd have to say that I'm not concerned about the declines in the least. When I saw the drop, I did some digging to see if there was any fundamental news that should lead to falling precious metals prices. There was nothing out there. Nonetheless, the decline is easy to understand.

The truth is that market movement never happens in a straight line. Even when bullish trends are prevalent, there are going to be points of declines. Today's declines may be attributed to normal market movements.

Where Silver Is Headed Moving Forward

Moving forward, I have an overwhelmingly bullish opinion of what we may expect to see from the price of silver. While economic conditions around the world are starting to improve, there's still quite a bit of concern, so this will likely lead to a continuation of strong safe haven demand. In light of the safe haven demand associated with the poor US economic data, I'm expecting that the Fed will keep interest rates the same during their September meeting. This will likely help to support further silver price growth. Subsequently, I'm expecting to see more gains. 

Joshua Rodriguez

Joshua Rodriguez is an avid financial professional. He is the owner and founder of CNA Finance, a partner at Modest Money, and a writer for US News & World Report, Investing.com, and more! Joshua takes a strong fundamental approach to market analysis and enjoys offering his take on what we can expect moving forward. You can reach Joshua at cnafinancehelp@gmail.com.