Silver Price Rises with Gold During Turmoil

Thursday, August 31, 2017

fine silver

With gold inching upward and Hurricane Harvey’s fallout causing havoc in the south, there have been plenty of economic headlines to watch over the past week. In news climates like this, it can be easy to overlook a precious metal like silver—but it’s worth observing that silver has returned to prices that it hasn’t seen since the beginning of summer. For investors looking for a hedge, watching silver prices rising with gold can be an integral way to understand how hedge investing looks in the second half of 2017.

The Week in Silver

Though the week is far from over, we’ve already seen movement over the past few days that should interest silver investors. Between August 25th and August 28th, according to APMEX.com, silver made a forty-cent leap in price. It was that price that positioned silver to where it began this morning, in the center of the $17-per-troy-ounce mark.

There was more going on in silver’s price than simply increasing, however. December silver futures rose 13 cents early this week, followed by a gain of 11 cents the next day. And though it’s tempting to point to Hurricane Harvey as the sole cause of all this movement for precious metals, we should always look at the strength of the U.S. dollar.

Fallout from Janet Yellen’s Comments

Last week, Janet Yellen—chairperson of the Federal Reserve—defended the regulations of the Obama era for keeping the economy out of a massive crisis. This suggests that Yellen sees a continued firm tightening of monetary policy to be at least a little problematic. The Obama-era policies after the Great Recession made credit flow freely—perhaps artificially so—and that contributed to lower value for the U.S. dollar and stronger values to be found in precious metals like gold and silver.

If Yellen’s public speeches show that she leans toward this policy in the future, it could suggest that the Federal Reserve reaction to another crisis would be to lean toward aggressive policy in terms of the supply of dollars. That means more value for gold and silver. This confidence in precious metals as a hedge seems to have gained steam in recent days, even ahead of Hurricane Harvey. It may be that investors are sensing there are few good asset classes for diversification if they don’t believe the current market success can be sustained for long.

Reading the Silver Tea Leaves

In this context, silver looks to hold on to its gains for a strong showing on the week, which would wrap up a strong showing for August. The price of silver began the month under $17 per troy ounce and has plenty of price room in either direction. From this vantage point, silver’s price of $15.54 as recently as July looks like it’s distantly in the rearview mirror—but investors would be wise to remember that just as precious metals like silver can rise quickly, they can also fall when confidence in the economy is renewed. Watching gold isn’t enough—investors should watch all precious metals as they move.

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Darren Capriotti

Darren Capriotti has been a market analyst for the past decade and is an expert in precious metals. He prides himself on his ability to analyze the market and offer true value to investors with questions about gold, silver, and other precious metals. Highly educated, incredibly passionate, and more accurate than most, Darren offers a true, unbiased look into what investors can expect in the precious metals market. You can reach Darren at dcapriotti@gold-eagle.com.