Silver Price Bouncing Around $17 Per Troy Ounce; When Will We See a Breakout?

November 9, 2017

Throughout 2017, the trend with the silver price has been cyclical, lasting about a month or so before repeating another up and down pattern. But silver’s performance as of late puts a wrench in that pattern. Instead of moving up or down as consistent with the 2017 prices, silver has hovered around the $17 per troy ounce mark. Silver investors are understandably frustrated if the metal does not break out after this point, or remains even lower at the close of 2017. But what’s causing this recent pattern, and might we see a silver breakout soon?

Silver’s Performance Since October

Now that we’re entering mid-November, it’s worth pointing out exactly where silver has broken the recent pattern. Look at the sixth-month chart from Apmex:

Here we see a hint of the roller-coaster pattern silver’s maintained throughout the year, especially in the early months. But with silver’s price locked around $17 per troy ounce since late September and early October, it appears that the precious metal will need a significant amount of pressure to break out. With the Dow Jones Industrial Average continuing to perform well and set new records, it might be some time before that happens.

Watching the Dollar Index

Usually, investors can count on an inverse relationship between precious metals and the U.S. dollar index. But since the beginning of October, the dollar has relatively strengthened, which suggests that silver should have moved lower by now. And while the late October trend in silver showed some signs of that same pattern, its November performance thus far is keeping the silver price afloat.

What does that mean? Something else is giving upward pressure to counteract the stronger dollar’s influence on the precious metal. But it’s also important to take a larger sample size of the correlation between the dollar index and the movement of precious metals, so this pattern will be worth a follow-up in the coming months, especially if there are big movements in either variable.

Silver’s Movement in the Future

When will silver break out, and what could cause it? There are a number of hypothetical catalysts for moving silver, including:

  • The U.S. Dollar index breaking heavily one way, especially if confidence declines with problems in the recent Republican tax proposals

  • Demand for silver and gold ticks up or down, particularly in international markets

  • Geopolitical headlines throw the markets for a loop, pushing the prices of precious metals way up—just as we saw in the wake of last year’s “Brexit” vote

While these are three of the most likely factors, however, it’s important to remember that precious metal investing is sometimes about what is not visible and not predictable. Holding a portion of one’s portfolio in precious metals helps diversify asset classes and protect against the unknown. With silver breaking a pattern as of late, it only goes to show that that unknown sometimes lies within the precious metals market itself. Later this year, in which markets expect another Fed rate hike, could be a very interesting period for gold’s little brother.  

Peru became the world’s largest producer of silver in 2012.

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