Why Silver’s History Could Suggest It’s Poised For Even Bigger Moves

There’s an old saying in sports as well as investing - hindsight is twenty-twenty. But even though hindsight is valuable, that doesn’t necessarily mean that previous movements by stocks and commodities are highly effective at predicting future success. But are there some facts about silver’s history that can help us better understand its future, particularly in 2016?

A precious metal like silver is often overlooked by safe-haven investors who have a lot of money to store and prefer to put it in gold. That’s why this is a powerful week to look back at silver’s history and find out what it means for the future.

Silver Hits An Important 5-Year Anniversary

Five years ago about this time, Comex silver futures weren’t trading silver at about $10 or $20 an ounce. Silver was approaching an all-time high at $49 an ounce. This was in late April and early May, making this week something of an anniversary.

This was a peak. Silver was not destined to stay that high. If you had sold your silver at that point, you would have made out like a bandit, while there were, undoubtedly, some silver bulls who believed that the price would continue to creep upward. Eventually, silver hit a bottom of $13.65 in 2015.

Recent moves, however, suggest that silver is “back.” With this morning’s silver price around $17.30 per ounce, it’s clear that silver is back on an upward trend, and, given just how far silver has gone up in the past, there appears to be plenty of daylight left.

The Gold/Silver Ratio

Macrotrends.net offers a customizable graph that charts the always popular gold-to-silver price ratio. You can see how this particular variable has changed over the past few years:

The ratio hit some recent lows while silver crept up during the aforementioned silver craze in 2011, and, since then, the ratio has been climbing back up. To many investors, this suggests that there is some upward pressure on silver, because a higher gold-silver ratio doesn’t tend to last very long before the silver markets correct it.

Even zooming out to a longer timeline, we see that the ratio is generally above the average. Does this mean you should sell the farm for silver right now? No. But it’s one important factor that you’ll want to keep an eye on.

The Silver Outlook For This Week

After a positive April for silver, investors are trying to figure out where silver is headed in May. Investing.com notes that, “On the week, silver futures surged 88.9 cents, or 5.26%, tracking strong gains in gold. For the month, silver soared 15%.” If silver continues to track these gains in gold, it’s possible that both precious metals could be in for another strong month. With another big Federal Reserve meeting slated for June, it’s apparent that silver and gold may hold out with strong prices longer than some people predicted. And if you look at silver’s history, both long term and short term, it’s clear that there is plenty of opportunity for growth.