Silver Price Climbs Substantially On BOE Stimulus Hints

Friday, July 1, 2016

silver

Silver has been one of my favorite financial assets to follow throughout the beginning of the year…and for good reason. Through the first half of the year 2016, the price of the commodity has climbed by roughly 25%. At this point, it doesn't seem as though the gains will slow any time soon. In fact, the Bank of England recently hinted at stimulus measures. As a result, the price of the precious metal is climbing even higher. Today, we'll talk about the hints from the Bank of England, why they are pushing the value of silver upward…and what we can expect to see from the precious metal moving forward.

Comments Made By Mark Carney

As mentioned above, the price of silver is getting a good boost in the market today as the result of comments made by Mark Carney, the governor of the Bank of England. Here's what I believe to be the most important snippet from the comments made...

“In my view, and I am not pre-judging the views of other independent Monetary Policy Committee members, the economic outlook has deteriorated and some monetary positive easing will likely be required over the summer... It now seems plausible that uncertainty could remain elevated for some time, with a more persistent drag on activity than we had previously projected...”

The statement above paints a very clear picture. The Bank of England didn't expect such a big fallout following the Brexit vote. As a result, they are expecting that the need for further stimulus will be there. In his statements Carney also pointed to the possibility of a technical recession. This is rough news not only for the UK economy, but for the global economy.

What This Has To Do With The Price Of Silver

While it may seem as though comments with regard to further stimulus out of the UK and economic issues to come have little to do with the price of silver, that simply couldn't be further from the case. At this point, silver has clearly joined gold in the safe haven category.

As a safe haven investment, the price of silver is highly susceptible to economic changes. After all, when investors are expecting poor economic conditions, they look to safe havens as a way to protect their financial assets. As a result, poor economic conditions signal increased demand for silver, ultimately sending the price of the precious metal upward.

With the UK economy expected to see drastic declines in the coming months, investors are on edge. After all, the UK is one of the top five economies. Therefore, any issues felt in the UK will likely be felt around the world. So, the news out of the UK is sending the price of silver up even further.

What We Can Expect To See Moving Forward

Moving forward, I have an overwhelmingly bullish opinion of what we may expect to see from the price of silver.  To be sure my opinion on this matter hasn't changed at all over the past several months. The reality is that all signs are pointing to price growth in the precious metal. With economic and market conditions concerning to say the least, safe haven investors are pushing demand up. Moreover in view of the current gold to silver price ratio, silver is more appealing than gold as it has more upward potential. Consequently, I'm expecting to see further gains in the price of the sterling metal.

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.