Silver Price News Shows Upcoming Gains of 33% by Q3 2017

This is a syndicated repost courtesy of Money Morning - We Make Investing Profitable. To view original, click here. Reposted with permission.

Share!Tweet about this on TwitterShare on FacebookShare on LinkedInEmail this to someonePrint this page

The biggest silver price news story last month has been that the metal managed to end 2016 in positive territory.

That’s remarkable because it’s the first time the price of silver has posted a yearly gain since 2012.

In my Dec. 23 update, I told you that silver prices had potentially bottomed. Some of the reasons I pointed to were very negative sentiment and large silver ETF outflows. Not to mention positive fundamental news suggesting lower mined silver supplies in 2016 and 2017.

Since the silver price hit a recent low of $15.76 on Dec. 23, its performance has been breathtaking. It’s been almost straight up, with silver trading near $16.55 as of Jan. 9.

This silver price news shows how the silver market is staging a turnaround that will continue throughout 2017…

This Is the Biggest Silver Price News of 2017 So Far

If you check out our chart here, you can see the sharp rise in silver futures from its late December lows…

silver price news

At the same time, we’ve seen positive momentum in the relative strength index (RSI) and moving average convergence divergence (MACD) indicators, which reflect strength in the metals market. The two have posted gains as the silver price rapidly approaches its 50-day moving average.

And if we look at the Global X Silver Miners ETF (NYSE Arca: SIL) – a proxy for silver producers – its surge over the last two weeks (circled in green, below) has been nothing short of breathtaking…

silver price news

Since Dec. 22, the popular fund has surged 15.1% and had only two down days. On Jan. 5, it soared right through its 50-day moving average of $34.84 to close at $37.38 – a gain of 8.32% that day alone.

So we can see that all of this bullish silver price news is thanks to a rapid shift in sentiment. Traders and investors are starting to cover their short positions and buy an undervalued asset.

Here are two fundamental reasons why silver prices will have a profitable year…

Silver Price News: 2 Factors That Will Hand Us a 33% Gain in 2017

The first factor is the most fundamental – supply and demand.

Over the past seven years, silver demand has increased by more than 35%. During that time, supply has only grown by just over 10%.  If we look at 2015, silver demand worldwide was 11% — or some 129 million ounces – greater than supply. As we all know, tightening supply and increasing demand translate into higher silver prices.

The recent silver price performance has made silver miners particularly attractive. With silver prices resuming their bull market in late 2015 and correcting over the last five months, the mining sector is one that needs to be on investors’ radars.

Don’t forget that silver production costs have fallen significantly since silver was in a bear market in 2011. From 2012 to Q3 2016, the cost of producing one ounce of silver has dropped 54.6% from $22.26 to $10.10. With the current silver price of $16.55, that means producers have a gross profit margin above 60%.

In other words, if you’re bullish on silver, you have to be doubly bullish on silver miners.

The second factor is the gold/silver ratio, whose recent movement has been big in the silver price news recently.

With the ratio currently near 71, silver remains relatively cheap. The ratio has stayed in a reasonably low range between its mid-December low of 67.5 and its mid-November high of 73…

silver price news

If that’s the case, the price of silver should be catching up to the price of gold in pretty steady fashion.

With all of this in mind, I think silver prices could gain 20.8% to $20 in the next three months. Furthermore, I see the silver price surging 33% to $22 by the second half of 2017.

 

To get full access to all Money Morning content, click here

About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free. Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors.

Disclaimer: © 2017 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201.

Wall Street Examiner Disclaimer: The Wall Street Examiner reposts third party content with the permission of the publisher. I curate these posts on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. In some cases promotional consideration is paid on a contingent basis, when paid subscriptions result. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler and no endorsement of the content so provided is either expressed or implied by our posting the content. The Wall Street Examiner makes no endorsement or recommendation regarding them. Do your own due diligence when considering the offerings of third party providers.

0 comments