Silver Price Ends Slump; Is There More to Come?

May 19, 2017

silver band

It wasn’t long ago that we were reporting in this very space that silver’s long, slow decline from the higher prices in April have materialized into some recent lows for the precious metal. But with a week of solid gains in precious metals, it appears that news has finally come to an end, and now, silver prices look poised for an impressive May—especially if the current trends hold up over the long-term.

At a low point, silver had finished in the low $16’s around May 8th and May 10th. Now, silver has steadily climbed back to the upper $16’s, possibly pushing even higher to the $17 range again—which seems like a reasonable “goal” for investors who are looking to end May on a positive note.

What Boosted Silver This Week?

Anyone paying attention to the massive news headlines and the big swings in the Dow Jones Industrial Average know that this was no ordinary week—for investors or for anyone else. But when it comes to the impact on silver, we have to zoom in a little more to identify which variables are most strongly at play.

With silver up about 3% for the week, as notes, the common thought was that tensions in the headlines combined with a decline in the U.S. dollar index made for the higher prices. And this may be true. But over time, it’s far more likely that the two variables may even be correlated to some degree. In turn, it’s possible that instability for the U.S. at large sent the prices of precious metals higher.

This is due to the effect of lessening confidence in the dollar leading to high precious metal prices. There may be some hedge investing in silver and gold as well, but that type of investing tends to be difficult to quantify.

Assessing The Health Of Silver’s Price

Is this recent rebound from an late-April, early-May bottom really substantial, or is it merely the fact that silver is meeting some resistance at a low price? There’s no way of telling for sure, particularly if the headlines tend to grow more mild over the next few weeks and some confidence in the markets is restored.

Overall, it’s hard to see how one can say with certainty whether silver’s price is headed up or down—the markets and the investing environment are simply too unstable at the moment.

Finding Consistency In Precious Metals

Of course, market instability is sometimes music to the precious metal investor’s ears. If silver and gold truly are hedges upon which to rely during times of economic turmoil, then silver and gold remain solid bets for those who believe that the disruptive headlines are bound to continue. Even so, it’s impossible to rely on all economic factors—including the weakening of the U.S. dollar index—to ensure proper support for precious metals. Late May will be an interesting indicator of where things may head this summer, for silver as well as all precious metals and hedge investments.

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

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