Why The Silver Price Is Where It Is: A Quick Review

Saturday, January 7, 2017

silver coins

We’ve just ended an entire year for silver. Consequently, it’s only natural to look at the past twelve months and ask not only what silver’s price yielded, but what the overall story and trends of the price of silver may be moving forward.

As it currently stands, the price of silver is approximately $16.46 as of this writing, a healthier number compared with the start of 2016. But is the trend on silver pointing upward or downward, despite what may have happened in the first week of 2017? Let’s review.

What Moved Silver In 2016

It’s no secret that precious metals enjoyed a raucous first half of 2016, followed by some correction back downward in the latter half of the year. If you bought your silver in early 2016 and sold by summer, chances are that you made out well.

In a review on silver’s year, Fox Business sought to explain the 15% overall growth in silver prices in 2016. They point to two specific movements in the price of silver, as you can see on the chart below:

The early lift came from an uncertain stock market that saw oil prices declining, while the second big lift came after the infamous Brexit vote in which the UK voted to leave the European Union. Investors in precious metals will note that gold followed much the same trajectory throughout the year.

As confidence returned to the stock market and in equities, precious metals dropped as the need for a hedge decreased. But it still lead to a positive year for silver prices overall.

What Might Move Silver In 2017?

“Brexit,” to some extent, was a one-off event. The startling vote, which surprised many pundits, worried many about international stock markets and the world economy as a whole. But as it turned out, Brexit wasn’t quite as damaging as some people expected. Even the election of Donald Trump as President, which initially sent Dow Index futures plummeting, started new rises in the stock market as equities showed resilience.

Expecting another Brexit-like event in 2017 is a stretch. If anything, it’s important to watch the Dollar Index and stocks to see if silver continues to be the powerful hedge with plenty of demand as it was in mid-2016.

Making Sense Of Current Trends

The current “bounce” in silver may be short-lived, according to analysis from DailyFX. While there is short-term “strength” in the gold and silver markets, they expect plenty of resistance to higher prices moving forward. It’s hard to see how this analysis might be wrong.

In general January may promise little movement in the world of precious metals. Investors looking for buying opportunities might even expect a slight dip going into the next quarter, though predicting those price changes is about as easy as predicting the weather three months in advance.

For now, silver has shown a little bit of confidence to start the New Year. Whether that confidence will last 12 months is an entirely different question that remains to be answered.

Also Read:

Silver Price Forecast: Expect Higher Silver Prices In 2017 And Beyond

Silver Price Forecast For 2017

2017 Price Forecasts For Gold, Silver And Mining Stocks


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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.