Yet another lackluster week for the price of silver has left the metal trading in a range near $14.15 per ounce.
Liquidity moves markets!Follow the money. Find the profits!
Volatility is low, and that has kept sentiment in the toilet. It’s little wonder.
Whether up or down, traders have few opportunities to make money trading an asset that moves so little.
But volatility won’t stay low forever. This past year, silver volatility was nowhere to be found until June, when silver prices sold off and the action was nearly all downward.
Urgent: This catastrophe could bring the U.S. economy to its knees – and make the Great Recession seem like a day at the beach. Read more…
Now silver is at levels close to its late 2015 lows. With the metal so badly oversold, I’d expect the bias to be mainly to the upside once volatility returns. And it will…
Here’s What This Week’s Silver Price Action Looks Like
Although silver’s range has remained pretty narrow lately, it has seen a little bit of action.
On Tuesday, Sept. 11, the price of silver dipped momentarily to $13.98 around 9 a.m. as strength returned to the dollar after a short dip. The U.S. Dollar Index (DXY) had retreated to below 95, then rallied anew to spend most of the day around 95.2. Despite that, silver prices too rallied back to close the day at $14.14.
Further dollar weakness on Wednesday dragged the DXY back down to 94.85 by late morning, where it consolidated the rest of the day. That pushed silver higher to $14.26 by 1 p.m., then it retreated slightly into the close.
Here’s what the DXY did over the past five trading days:
Although silver benefited from further dollar weakness on Thursday, a reversal on Friday sent the grey metal back down to end the week at $14.06.
But on Monday, trade war fears resumed with the DXY dialing back about 50 basis points to 94.50 from Friday’s high. U.S. President Donald Trump wants to proceed with tariffs on $200 billion of Chinese goods, and China appears unwilling to negotiate under duress.
That dented the dollar and allowed silver to rise on Monday to a midmorning peak of $14.23 before softening mildly to $14.17 by midafternoon.
Here’s my next price target for the price of silver in 2018…
Here’s Where the Price of Silver Is Headed Next
With fears of trade wars regularly front page news and an expected rate hike from the Fed later this month, it appears the dollar’s bias is to the downside.
I’ve mentioned several times that President Trump wants a weaker dollar. He’s regularly vocal about his discontent with the Fed’s rate hiking policy. Even if the Fed keeps hiking, Trump’s displeasure and escalating trade wars are likely having some effect.
Though more gradual recently, the relative strength index and moving average convergence divergence continue on a long downward trend since late May.
Meanwhile, the 50-day moving average is flattening out, and I think the DXY is likely to trade near that level until the expected September Fed rate hike becomes a reality.
For now, traders are mostly buying the rumor, but I think they will soon switch to selling the news.
Silver continues to bounce around but seems to be forming a base just above $14.
That’s somewhat encouraging as it’s at least higher than the late 2015 to early 2016 lows around $13.50.
If silver’s forming a higher low, and if its price action looks anything like it did in early 2016, we could be in for quite the ride.
A recent report from Capital Economics said next year silver was likely to begin outperforming gold as both start to rally. With the gold-to-silver ratio above 84, silver should see more upside. The research firm is calling for a relatively modest silver gain to $17.50 by late 2019.
For now, if the Fed rate hike turns out to be the next catalyst, I think silver could retake $15. Further strength would likely take it to $15.60.
And other forces, like a stock market correction, big dollar weakness or major short covering could lead to action similar to the first half of 2016. That would mean a more than 40% gain in just seven months. When volatility returns, that’s what it can do.
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: © 2018 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 The Price of Silver Could Jump 40% in the Next 7 Months 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 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. I may 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.