Silver Reaches New Highs; How Long Will The Bull Market Last?

Yesterday’s Fed announcement that interest rates would remain stable suggested to many that the next quarter might bring “more of the same” for the US economy. For some, this is bad news. The U.S. economy is showing some signs of stagnating. But for bull markets like silver, “more of the same” means something else entirely.

So where do we find the silver markets positioned after this important meeting. And what should precious metal investors expect over the course of the next few months, and even years? Is silver at a current high, or is it poised to keep climbing? Let’s try to decipher some of the recent news.

Signs That Silver’s Price Is Healthy

According to Mining.com, there are plenty of reasons to believe that the price of silver is healthy, which is to say, not inflated. In fact, there are actually still signs of optimism that silver prices will increase. Said Mining.com, “Silver futures in New York for delivery in May, the most active contract, added nearly 2% in early dealings to trade at $17.48 an ounce, before paring some of those gains by the close.”

But there’s more going on here than just silver futures. Consider the numbers:

• Silver has moved up 26% on the year.

• With gold at about $1,250, the price of gold to the price of silver is over 70. That’s still much higher than its traditional number. According to Deutsche Bank, that suggests that silver could still be poised to break over $20 per ounce not in the long term, but in the short-term future.

• In addition to Deutsche Banks’ positive outlook, Bank of America Merrill Lynch raised their price forecasts for silver, citing increased demand and declining mine numbers.

Add it all up and it appears that it still might be a good time to go “in” on silver. In fact, the high ratio of gold to silver suggests that over the long term, silver is still selling at a discount.

A Weak Dollar Is Bullish For Silver

As NASDAQ.com points out, “The fall in USD explains why silver prices are higher.” Although most investors look to gold as a hedge against the dollar, and as a hedge against inflation, including even precious metal investors, it’s worth remembering that silver often serves the exact same purpose. And it does it for a discount.

Gold is the more efficient of the two if you’re interested in maintaining your own bullion. But silver is the more accessible of the two. A wise investor who likes the precious metals market as a whole won’t ignore either one of them. They’re not completely tied together, contrary to popular belief, even if they often share some of the same trends.

All traffic lights for silver appear to be green. Although we’ve already missed silver’s recent bottom (considering just how far silver has come up in 2016), that doesn’t mean that all of the gains to be had have disappeared. On the contrary, they might just be starting.