When Will Silver Go Up?

It’s no secret that the silver price can be volatile. As of mid-June it was near $17 per ounce, but over the last year it’s risen as high as almost $18 and fallen to nearly $15.50.

Many investors are confused by silver’s movement. After all, the white metal is a safe-haven asset that generally fares well in times of turmoil, and the past year has been packed with tense political events.

Unfortunately, answering the question “when will silver go up?” is tricky – even seasoned analysts can’t tell the future, and it’s difficult to find a broad consensus on the topic. Nevertheless, it’s definitely possible to track down different opinions on the topic. Investors interested in betting on the silver price would do well to keep them in mind as they try to determine where it may move in the future.

When will silver go up?: Silver year-on-year

To approach the question “when will silver go up?” it’s useful to look at its past performance. As mentioned, silver has definitely had ups and downs over the past year, and midway through June the precious metal was down about 2 percent year-on-year. As the chart below shows, its highest level during that time was $17.93, and it reached that price in September 2017.

Chart via Kitco.

It’s helpful to look at gold price drivers when trying to understand silver’s price action over the last 12 months. Silver is of course the more volatile of the two metals, but nevertheless it often trades in tandem with the yellow metal.

For gold, and by extension, silver, a key price driver lately has been uncertainty. As noted, the past year has been filled with major geopolitical events like tension between the US and North Korea, as well as elections in Europe. Those and other developments have been major sources of concern for investors.

Precious metals investors have also been closely following the US Federal Reserve’s interest rate plans. Rate hikes are generally negative for gold and silver prices – that’s because when rates are higher it is more profitable to invest in products that can accrue interest.

However, last year’s rate hikes were widely anticipated, and thus had a muted impact on both metals. The increases were essentially “baked into” precious metals prices and they adjusted early to the prospect of higher rates.

That said, further rate hikes remain front and center in many investors’ minds – and for good reason. The Fed has already hiked rates once this year, and is seen raising them further in 2018. Investors wondering “when will silver go up?” would do well to watch what the central bank does.

When will silver go up?: Silver in the future

With the silver price down year-on-year, investors are understandably disappointed. They continue to ask the question “when will silver go up?” and are on the lookout for catalysts that may drive it higher.

Moving forward, geopolitical events and potential Fed rate hikes will certainly be key factors to watch. That said, it’s worth noting that the upheaval seen over the last year could be cooling down, at least on the US/North Korea front – the leaders of the two nations recently wrapped up a positive meeting.

But what about supply and demand? Interestingly, the latest World Silver Survey, published by the Silver Institute and Thomson Reuters’ GFMS team, reveals that in 2017 the silver market was in deficit for the fifth consecutive year, this time by 26 million ounces.

When asked why those supply and demand dynamics have not resulted in a higher silver price, Johann Wiebe, lead analyst for Thomson Reuters’ GFMS team, explained, “the answer is very simple and straightforward: aboveground stock.”

He said that unlike base metals, silver “has an investment component [and] is stored in almost the same form as it is refined” – notably bars, coins and the like. Wiebe added, “there is an abundance of that material available. That is metal that can come back to the market quite quickly in the case that there is demand.” In other words, there’s rarely a chance for supply and demand imbalances to get out of hand.

There’s also the question of manipulation – experts such as Ed Steer of Gold and Silver Digest and GATA believe that the silver price is controlled by entities like JPMorgan (NYSE:JPM) and will not rise until these players allow it to do so.

While these factors don’t mean that the silver price will never again reach its highest price of nearly $50, it does mean that investors should try to keep their expectations realistic. This year, firms surveyed by FocusEconomics expect an average silver price of $17.80.

For investors, a key point to remember is that the resource space operates cyclically – while commodities like silver experience price rises and falls, ultimately what goes up must come down, and vice versa. The advice to “buy low and sell high” is repeated often for a reason, and though it’s nigh impossible to predict market bottoms, at today’s price, silver may certainly be a good bet.

What’s your forecast for the silver price?

This is an updated version of an article first published by the Investing News Network in 2015.

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Securities Disclosure: I, Amanda Kay, hold no direct investment interest in any company mentioned in this article.

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