Silver Shows Signs of a Recent Bottom in Prices

Friday, June 23, 2017

In early May, the price of silver bottomed out in the lower $16 per troy ounce range, ultimately gaining traction throughout the month to zoom up to a recent high near $18 per troy ounce in early June. Since then, silver’s decline has been consistent and speedy, moving back down to about $16.50 per troy ounce. But recently—as recently as this morning—there are some signs of life for the precious metal worth watching.

How do we know it might be a new bottom and not simply another blip on the way into $15 per troy ounce range? Because silver has rarely flirted with $15 per troy ounce this year, as the following chart from Apmex.com will explain:

silver performance year to date

That chart shows silver’s performance for the year to date. Although silver’s slight bump this morning is merely a blip on a timeline that long, it shows the overall trend: silver looks like a roller coaster with brief cycles that last a month to six weeks.

Now let’s find out if silver is about to start a new cycle.

What is Boosting the Price of Silver Today?

An article from Economic Times points to new demand for precious metals in jewelry. Although jewelry demand tends not to have a major effect on silver, sometimes news of this sort can send a precious metal’s price moving upward if investors are already looking for an excuse to buy on the dip.

But as the article points out, gold has also ticked up a bit, which points not just to a specific demand for precious metals but possibly macroeconomic factors as well. But even investigating the U.S. dollar index this morning, we find the currency up, not down, as one would expect. (It is worth noting, however, that the USD is down against the Japanese Yen, which could explain the precious metal bump this morning as well). Perhaps demand is driving the price more than usual.

Whispers of Recession

Has the Donald Trump rally gone too far? There’s no doubt that stocks continuing to set new highs can raise alarm bells for those of us counter-intuitive thinkers who are always holding our breath for the next recession.

Not only did the stock market perform well in Trump’s first 100 days—he’s beat out by only four other presidents—but the market has continued to show signs of a strong engine. The question for silver investors is how long this can last. And if the business cycle is starting to show hints of a recession, it’s possible now is the time to get in on a hedge like precious metals.

Finding a Foothold

Silver’s price appears to show signs of life again after a poor performance in mid-June. But one simple bump should not be enough to convince most investors that things have changed. The wise thing to do at this point is watch the markets and the economic headlines, continue to watch how June develops, and keep an eye on the price of silver. Finding a foothold in precious metals can be difficult, even when prices appear to be down. 

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.