By Diane Alter Money Morning August 18 2016
Despite the metal’s 3.8% decline so far this month, our new silver price prediction shows big
gains for the rest of 2016.
In fact, Money Morning Resource Specialist Peter Krauth sees silver prices posting double-digit returns from now through December.
Before we reveal our silver price target for 2016, here’s how the price of silver has performed recently…
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As of 12:35 p.m., the silver price today was up 0.4% and trading at $19.72 as investors continue to digest yesterday’s FOMC minutes.
The minutes showed mixed opinions regarding the next interest rate hike. Although the central bank was upbeat about the U.S. economic and labor outlook, Fed officials said a rate hike will only happen if data continues to improve. These statements assured silver investors the Fed likely won’t raise rates at its next meeting.
Another bullish factor for silver prices today is the softening U.S. dollar…
The U.S. Dollar Index (DXY) hit a seven-week low overnight. A declining dollar is bullish for the silver price since the metal is priced in dollars. When the dollar depreciates against other currencies, it makes silver cheaper for users of those foreign currencies.
While the Fed and dollar are boosting silver prices today, the metal has seen a huge rally this year. It’s surged 43% in 2016 thanks to global stock market volatility, low oil prices, and the use of negative interest rates. The Brexit vote has also stoked interest in silver as a safe haven and will continue to do so as the consequences take years to unfold.
All of these reasons are why silver is among the best-performing asset classes this year. That’s why Krauth – a 20-year veteran of the precious metals market – just released this new silver price prediction for 2016…
We see the price of silver rising 11.6% from today’s price to $22.
One reason for our bullish projection is continued interest in silver mining stocks. This year’s top 10 highest-returning non-leveraged exchange-traded funds (ETFs) are all focused on silver and gold, according to ETF Database.
While the funds differ, all invest in this year’s hottest sector – precious metal miners with a focus on silver.
The leader is the PureFunds ISE Junior Silver ETF (NYSE Arca: SILJ), which is up 258% from January to July. The iShares MSCI Global Silver Miners ETF (NYSE Arca: SLVP) took the second spot with a 179% return over the same period. The Global X Silver Miners fund (NYSE Arca: SIL) rose 175% to take the No. 3 spot.
And they still have room to run…
CIBC World Markets recently gave the silver mining sector an “Overweight” rating. The firm says that while the mining sector has logged substantial gains so far this year, the sector is still down 43% from its peak. But it’s poised for a continued rebound as the sector has recovered about 85% of its losses in the past.
Investors are also snapping up silver coins at a record pace…
The U.S. Mint reported sales of 2016 American Silver Eagle coins increased to 26.3 million in the first half of 2016. That’s up 20.5% from the same period in 2015.
Krauth said the silver price may fall to its 200-day moving average near $18. From there, his silver price prediction shows an 11.6% gain to $22 by the end of 2016.
Daniel Fisher formed physical Gold in 2008, after working in the financial industry for 20 years. He spent much of that time working within the new issue fixed income business at a top tier US bank. In this role, he traded a large book of fixed income securities, raised capital for some of the largest government, financial, and corporate institutions in the world and advised the leading global institutional investors. Daniel is CeFA registered and is a member of the Institute of Financial Planning.