Why Peter Krauth Sees the Price of Silver Rebounding from Here

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

Calling the price of silver a roller coaster would be an understatement.

All you need is to look at a 60-day or 6-month price chart, and you’ll see exactly what I mean.

In fact, even the past week can make seasoned silver investors nauseous. It’s been a bumpy ride, and it’s not over. On June 7, the price of silver was trading as high as $17.60. By last Tuesday, it had fallen all the way to $16.80.

The price of silver today is down another 0.63% to $16.58.

Although silver has lost ground to gold in the last few days, a glance at the price chart shows we may already be at support, bolstering the case for a return to upside price action from here.

price of silver

A quick comparison of gold and silver in the last five trading days shows their price behavior has been nearly identical, with silver of course amplifying the movements.

Let’s examine silver’s volatility over the past trading week, then look to what may lie ahead for the precious metal…

How the Price of Silver Is Trending Now

Silver began the week on a bearish note, following through on weakness from the previous trading sessions.

The metal opened on Monday at $17.09, and essentially headed only south for the remainder of the day. The U.S. Dollar Index (DXY) provided the headwind, rising from just above 97 to about 97.25 in short order. By the late afternoon close, silver had lost $0.16 per ounce, trading hands at $16.93.

On Tuesday, as the FOMC began its two-day meeting, silver weakened even further, opening at $16.82.  By 10:00 a.m. it had fallen more, priced at $16.70. That was to be the low for the day, as silver bounced back on minor DXY weakness. By the close, the white metal was at $16.80, just $0.02 below its open.

Urgent: An incredibly rare gold anomaly is shaping up in the markets as we speak – one that has occurred ONLY twice in the past 20 years. And it’s about to happen again. Details here…

Wednesday, as the U.S. Federal Reserve was preparing to make its rate hike announcement, silver action got a lot more interesting. It had mustered a bit more strength in overnight and early morning trading, opening at $16.91. Then it exploded higher, like gold, on disappointing retail sales, suggesting Q2 GDP may fall short. But the silver party was soon over, as Fed Chair Janet Yellen’s hawkish comments spooked buyers into thinking the Fed would remain on a steady rate-hiking path. So silver then immediately tanked from $17.18 at 2:00 p.m. to $16.84 by 4:00 p.m., to close slightly better at $16.86.

silver prices

On Thursday, the dollar got its second wind, powering from 97 to 97.50 within hours. That was enough to squash silver, and it opened at $16.74. As the DXY stabilized, so did silver, which closed barely lower at $16.73.

Friday morning’s profit taking in the dollar supported silver in early morning trading, but it only managed to open at $16.74. From there, even with a retreating DXY, silver weakened to $16.68 by midafternoon.

Now that we know how the price of silver has been trending this past week, here’s where I see it going from here…

Here’s What’s Next for the Price of Silver in 2017

Could we be at or near an interim bottom in silver? I think so, and here’s why…

Looking at sentiment, recent Commitment of Traders (COT) reports show that smart money-hedgers are nowhere near a bearish extreme, having moved substantially towards bullishness in the last month.

And interestingly, a Nasdaq news article just days ago pointed out that the iShares Silver Trust exchange-traded fund (ETF) just had a large drop in outstanding shares, pointing to investor pessimism that is often a good contrarian indicator.

Looking at the silver price chart over the past year, we see that its price found support around $16.50 back in late November, and given current sentiment, a higher low at that level just may be in the cards.

silver prices today

With the gold/silver ratio currently back to about 75, the odds are in silver’s favor to make decent gains from here.

Looking at demand, recently reported numbers from one of the biggest consumers of silver, India, show that April imports blasted 47% higher year over year to 606 tons that month and 55% higher over this past March

Given silver’s behavior around recent Fed rate hikes, I expect the metal to bottom soon, then head higher. My next target remains $18.50, followed by $22 later this year.

 

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.

The post Why I See the Price of Silver Rebounding from Here appeared first on Money Morning – We Make Investing Profitable.

Wall Street Examiner Disclosure:Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. I am a contractor for Money Map Press, publisher of Money Morning, Sure Money, and other information products. I curate posts here 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 I receive promotional consideration 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, unless authored by me, under my byline. No endorsement of third party content is either expressed or implied by posting the content. Do your own due diligence when considering the offerings of information providers.

Leave a Reply