Silver Price Roundup: How the Precious Metal Performed in June

Thursday, June 29, 2017

silver coins

We’re near the end of June, which conveniently ends on a day of trading tomorrow—Friday the 30th. What has the month meant for the price of silver? Let’s look at some of the headlines from the precious metal throughout the month to get a context for the current silver price and learn more about where it may be heading:

Silver Trend: The Performance Through June

Silver entered June at a healthy price above $17 per troy ounce, relative to silver’s performance in recent years. In the first weeks, the price went up to briefly flirt with $18 per troy ounce before declining rapidly in the middle of the month, eventually sinking below $17 per troy ounce. Of course, the major news for precious metals in June was the Federal Reserve’s announcement that it would raise interest rates, which may largely be the reason silver has not returned to its pre-announcement prices.

As it stands now, silver is still about a quarter of a dollar under $17 per troy ounce, which will likely result in an overall decline on the month.

The Consequences of an Interest Rate Hike

We can’t perform a review of June in precious metal prices without looking at one of the most important pieces of economic news: the Federal Reserve raising interest rates for the second time in 2017. The new goal range of 1% to 1.25% is still extremely low relative to the overall history of interest rates, but a new high since the 2007-2008 financial crisis.

Traditional analysis suggests that higher interest rates will be bad for gold and silver, and the prices in both of these precious has borne out these thoughts. But it’s important for long-term investors to remember how low interest rates remain. This means that there is still room for precious metals to grow…and also room for the Federal Reserve to continue ticking up interest rates if the economy remains stable.

An Eye on the Silver:Gold Ratio

Long-term precious metals investors know the importance of the ratio of the price of silver to gold. As it currently stands, that ratio is high against its historical average. Investing.com included an article examining the role of this ratio in understanding the relationship between gold and silver. Silver was a strong investment during the recession in 2008, once peaking at near 85 on this ratio, but overall the prospects for silver remain high, at least when measured against gold.

What to Make of June’s Performance

In all, June was a relatively predictable month for the price of silver. There have been few macroeconomic factors as of late that suggest precious metals are due for a fast takeoff, and the news out of the Federal Reserve has kept precious metals prices in “humble” territory. But with July a relatively open month for the metals, investors should keep an eye on the price. Geopolitical headlines, too, will continue to impact confidence in the market, which in turn has an impact on the price of precious metals like silver.

 
 

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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.