Silver Price: How Precious Metals Respond to Mixed Days on Wall Street

November 30, 2017

Though this morning saw the Dow Jones Industrial Average rise to new heights, it’s not hard to see what happens to precious metals when there’s confidence in the markets. But what about mixed days—and weeks? Yesterday was a mixed day on Wall Street, with the Dow Jones Industrial Average ticking upward and the Nasdaq and S&P 500 moving down. Gold’s price has dwindled below $1,300 again as of yesterday’s close, with silver starting the week with a strong dip below $17 per troy ounce. Is this an indication of how precious metals react to mixed days on Wall Street?

Watching Cryptocurrencies, and Is Silver the “New Bitcoin”?

Let’s start outside the world of high finance by looking at cryptocurrencies. Bitcoin made major news this week by eclipsing $11,000 per coin (before stumbling the next day). Now, Keith Neumeyer of First Majestic Silver Corp is saying that silver might be the new Bitcoin.

What did he mean by this? It might not be unusual to see someone from a silver company foreseeing optimism in a particular precious metal market, but Neumeyer’s optimism points a rosy picture of the future of silver, one day pushing it up to Bitcoin-like prices. For a long time this year, gold has seen pressure at $1,300 per troy ounce with silver encountering its own at $17 per troy ounce. Though Neumeyer’s position relies on economic fundamentals like supply, these predictions may be bold even for silver bugs.

Uncertainty on Wall Street Leading Investors to Seek Alternatives

When Wall Street has so-so days like it did yesterday—particularly with tech stocks getting hammered all Wednesday long—it only stands to reason that some investors could look elsewhere for gains. But this doesn’t always necessarily bear out. Other factors, including the strength of the U.S. dollar, have a lot to say in the short-term when it comes to precious metals like gold and silver.

With a significant dip in the middle of this week, it appears that silver is not primed for a sudden uptick, particularly with strength and confidence as perceived in the markets. The holiday season is expected to be strong, and yesterday’s revision of the GDP projections showed that this economy has legs. That means that 2017 might not be the banner year for silver that many were hoping—but it doesn’t mean that 2018 will necessarily be the same, either.

Ways to Watch Precious Metals on Mixed Days

To get a better sense of precious metals and how they respond to mixed days on Wall Street, it’s important to know a few tools:

  • SLV at MarketWatch is a nice tool for checking out the performance of silver, even though its price will not precisely match the actual spot price of silver. It’s actually the price of the iShares Silver Trust—but it still seeks to emulate the price of silver and will tend to respond to the markets just as silver will.

  • The U.S. Dollar Index is also worth watching thanks to its dramatic impact on precious metals—its relative strength early this week is an opposite image of what we’ve seen out of the early returns for silver.

Precious metal investors who understand silver will likely know that one day does not define a single season for the precious metal—but it’s important to understand these days in order to find ideal pricing points for buying on dips, as well as getting a better sense of the context of markets as a whole.

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.

1 cubic foot of silver weighs approx 655 pounds whereas 1 cubic foot of gold weighs more than half a ton.