Silver Price Forecast: In Search of a “Silver Lining” After a Dip

December 8, 2017

fine silver

This week’s news in silver has been—fair to say—mixed. Silver took a sudden turn for the worse when it had been holding on to psychological barriers like the $16 per troy ounce mark (which may be an indictment of these so-called “psychological barriers” to begin with). But where has silver come, and where might it be headed as the holidays give way to a new year? Let’s look for the silver lining in this cloud and try to find where the white metal might be headed in 2018:

A “Boring” Run for Silver?

Let’s face facts: the run on silver in 2017 hasn’t been as exciting as what we might have hoped for after the 2016 Brexit vote. Mining Journal recently pointed out that this run has even been “boring.” Said a commodities team: “silver is ending a boring year badly.”

But those glum words might not sting as harsh as they first seem. The same team believes that there’s potential in silver’s 2018 performance to reverse that trend, saying that the year could represent a turnaround for the white metal. This, in turn, would indicate that the current silver prices represent a new low—or a “dip,” rather—which would constitute a unique buying opportunity before January hits.

The team also pointed out that “when silver goes, it goes a lot,” indicative of silver’s volatility. That volatility could spell a fast rebound, especially if Bitcoin ever proves a bubble and investors need to move money out of the market and out of the cryptocurrency.

Watching the Signs in the Silver Market

Which way will the silver market go come 2018? There’s no crystal ball, but Kitco News recently pointed to a couple of factors that could suppress the price of precious metals, including:

  • A rise in real interest rates. With the possibility of looming interest rate hikes this December as well as in 2018, it could spell strength for the U.S. dollar. The wave of optimism in the markets also points to less demand for gold and silver as hedges out of the stock market.

  • U.S. dollar strength. If the U.S. dollar does bolster in strength next year, it could come as a result of these policies—especially as the confidence in the markets continues to carry over from the strong 2017 we just saw.

Putting these factors together could spell lower prices for both gold and silver.

A Change in the U.S. Economy

Of course, not every investor chooses silver because they’re full of confidence in the dollar and the U.S. economy. Quite the opposite—investors seek out precious metals to serve as a portfolio hedge, protecting against the unexpected. If there were a major crisis in 2018 that upset the markets and pushed metals prices higher, it would follow the philosophy of “expect the unexpected.” That might not be possible when it comes to investing, but if there is a change in the U.S. economy in 2018 or even 2019, this bull run on stocks can’t last forever.

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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.

Gold weakens on global cues and lackustre demand