Silver Price Forecast: How Will Precious Metals Perform in a Bull Market?

October 19, 2017

silver bars

If there’s anything the Dow Jones Industrial Average has told us recently, it’s that this market has legs. Those in 2015 and 2016 who believed the market was inevitably headed to a short-term correction—only to take their money out of the markets—have missed out on some incredible gains. But there’s another opportunity here that we have to take into account for a full forecast of silver’s chances late this year and into 2017. We shouldn’t ask how silver will perform if the market goes down. Instead, how will silver perform if the market keeps doing what it’s been doing?

Silver Throughout the Bull Market

It’s fair to say the United States stock market has been in a bull market ever since the “Great Recession,” with cheap, available credit and plenty of tech stocks driving the way. With the following chart from APMEX.com, we can see exactly what silver’s done in that time:

Everyone in precious metals likely remembers the boom around 2011, in which metals prices were through the roof and appeared to be headed even higher. Then things calmed back down again, heading in 2016. In 2016, the Brexit vote sent metals some new life, which in turn shows up even on this silver chart.

All in all, however, we see a relatively stable chart. Depending on when silver investors got in during the Great Recession, it’s possible that silver has either not moved or moved up slightly. For a metal that’s often seen as a hedge against a declining stock market, that kind of performance is up for interpretation.

Will Metals Decline with a Market Correction?

With silver’s reputation as a hedge investment, some believe that a stark decline in stocks would send the metal skyrocketing. But as we saw ten years ago, that simply wasn’t the case. Precious metals suffered during the darkest days of the Great Recession, ultimately showing that any strategy requires patience and a long-term mindset to succeed.

Like stocks, however, silver offered amazing returns for anyone smart enough or bold enough to invest on this dip. That was as low as silver has been this past decade, and the recent silver prices have been stable enough to suggest maybe the precious metal is at a new long-term bottom.

What It All Means for 2017 and 2018

What can we read from silver’s performance in bull markets that will help us navigate the waters of a Dow Jones Industrial Average that could press to 24,000? Simple: high stock prices simply do not correlate with high precious metal prices as strongly as some would think. It’s not as easy as looking at the stock market to see if it’s up or down. Although gold and silver are “battling to hold support” with the recent news in the record-breaking stock indexes, the investors who have a long-term view will tend to win out. There’s simply no telling where a metal like silver will be headed over a month or two—but over the long run, it’s clear that the metal knows how to hold on to its value.

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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.

Spanish Conquistadores invaded the Inca Empire in 1528 to steal their silver and gold.