One of the frustrating things for precious metals investors in recent years has been a perceived lack of consistent price growth. All the conditions seem to be in place for an enormous spike in precious metals prices, yet it never seems to materialize.
That’s particularly true for silver investors, who have watched silver demand increase and silver supply decrease, while prices still seem to underpeform. So when will silver make its big breakout? Well, it may already be underway.
On the first trading day of 2019, silver closed at $15.49. By the end of the year, it was $17.82, a gain of 15%. That may not be as good as the 22.2% the Dow Jones Industrial Average gained during the same time period, but it’s still very good performance, especially given the low interest rate investing environment we’re in. And silver’s overall performance from the beginning of 2019 to today has far outclassed stock markets.
With a price of $24.58 per ounce at the time of writing, silver has gained 59% since the beginning of 2019. Compare that to the Dow Jones, which has gained only 21.4% during that same time period. So if you had invested in silver at the beginning of 2019, you would have seen nearly triple the investment gains to date versus investing in stocks.
The best may still be to come, however, as everything is still aligning just right for a major silver price breakthrough. Silver is already in short supply above ground, with decreasing amounts of the metal being mined each year. Increased demand from industry, like that for the production of solar cells, continues to draw down silver stores. And with increased demand from investors, the conditions are right for massive gains in the silver price in the coming months and years.
Even the economic downturn and slowing world economy in early 2020 weren’t enough to dent the silver price. Despite an initial fall in price due to a decrease in industrial demand, the increased silver demand from investors more than made up for that.
Keeping up with trends in the precious metals market and attempting to predict the future price of silver can help investors determine what percentage of their retirement portfolio they want to allot to silver. As part of a balanced and diversified portfolio, silver can play a strong role in protecting your investment wealth in the face of economic headwinds. Whether you decide on a silver IRA rollover or just want to get started with a roll of silver coins, investing in silver can help safeguard your wealth through turbulent times.
Indicators for the Future of the Silver Price
One of the problems that many people have when looking at the silver price, and financial assets in general, is focusing on short-term price movements. The price of silver throughout the day can be influenced by any number of factors: large silver depositories leasing silver, institutional investors reallocating assets ahead of quarterly filings, or even just pieces of positive or negative news regarding industry or politics. But if you’re going to invest in silver for the long term, it’s far more important to predict what silver will be worth in 10 years rather than what the price will be in 10 days.
If you want to accurately make a future silver price prediction, you have to screen out most of the news and commentary that you’ll read regarding silver. From overly enthusiastic silver bulls to bears who think silver will eventually be worth less than lead, financial media is full of people with their own take on silver. Screen out the noise and focus on the big picture issues that will drive silver prices.
It may behoove you to avoid many of the aggregated economic statistics such as inflation figures, which don’t always correlate to moves in the silver price. Since silver production is very often a byproduct of mining for gold, copper, lead, and other metals, and because silver demand is split about 50/50 between industrial and investment demand, you may want to make a future silver price prediction by looking at moves in the prices of other metals such as gold and copper.
The Price of Gold
Silver’s price is most analogous to that of gold, particularly when economic performance turns for the worse as it has in 2020. During a weak economy, the prices of base metals, such as copper and nickel, deteriorate due to falling demand from industry. In contrast, the prices of silver and gold rise as investors snap them up to strengthen their investment portfolios.
Gold and silver prices, therefore, often fluctuate in tandem, although silver tends to experience more volatility in price, particularly on the upside. It’s rare to see gold increase and silver drop, or vice versa. And the long-term trends for both metals generally tend to mirror each other.
Gold gets all the attention in the mainstream financial press, which is understandable. But when you start to read about gold picking up steam and seeing price increases, there’s a very good chance that silver is making similar moves. And very often those moves in the silver price are often larger percentagewise than those in gold.
The Euro and Dollar
It’s perhaps not surprising that gold and silver are priced in dollars in the US and in euros in Europe. Because of the constantly fluctuating exchange rate of the dollar to the euro, silver could be increasing in price in Europe while decreasing in price in the United States. Pay attention to silver’s price both in euros and dollars, and to what the long-term silver forecasts in each currency are. When silver makes a breakout run, it increases in price in both currencies.
You also want to pay attention to the dollar index, because that indicates the relative strength of the dollar against other major world currencies. As the dollar index declines, that normally indicates a rise in price for both gold and silver. Again, pay attention to long-term trends and ignore short-term noise to make an accurate future silver price prediction.
The Commitment of Traders Report
The Commitment of Traders (COT) report is data published by the US Commodity Futures Trading Commission (CFTC). It consists of data describing the positions held by large traders in commodities such as gold and silver.
Analyzing the COT reports each week shows which way professional traders are moving in the markets and what their expectations of the long-term silver market forecast are. The more long positions taken, the higher traders predict the future silver price will be. The more short positions taken, the lower they predict the future silver price will be.
It’s important to look not so much at the total positions, but the change in positions from week to week and the developing trends over the long term. The more traders moving from short to long positions, the better the outlook is for the silver price. But even if you see movement from long to short positions, that doesn’t necessarily mean that the outlook for the silver price is negative. It could just be an indicator that some investors are looking to take advantage of short-term pullbacks in the silver price to take a profit, while the long-term silver price trend remains positive.
Silver Price Forecast for 2021 and the Rest of 2020
Given how much silver has grown in price this year, and how much further it has to go before it reaches its all-time highs, it shouldn’t be any surprise that we see the future for silver as being quite bullish. A lot is still riding on the result of the Presidential election, but even a Trump win (that would be seen as good for the economy) can’t overcome the deep-seated structural issues that still beset the economy. Continued economic weakness will likely result in more investor demand for silver, as investors look to safeguard their assets and protect their savings.
For the remainder of this year and into 2021, we foresee a tremendous potential for further economic stimulus from Congress. That should also result in a further boost to the silver price. The $30 mark should be easily within reach, particularly since silver already breached the $28 level earlier this year. And don’t be surprised to see silver break through to the $40 mark or even to regain its all-time high near the $50 mark in the next couple of years.
You’ll also want to keep your eyes on the gold to silver price ratio. In recent years it has gone over 100 to 1. Currently it’s around 77:1, but historically the ratio has tended to hover between about 40:1 and 60:1. A reversion to historical ratios would easily push silver up above $40 an ounce or more. So if you see the gold to silver price ratio falling further and further, it’s a good indicator that silver could be poised to make bigger price gains (percentagewise) than gold.
Investing in Silver
If you agree that silver has tremendous potential for price appreciation and is the right investment for you, the next step is deciding on how to invest in silver. The options can seem limitless and daunting, especially to someone who has no experience with precious metals markets.
Thankfully there are experts out there who can help you navigate all of your options. Whether your first experience comes by buying a handful of coins, or by rolling over existing retirement assets into a gold and silver IRA, the experts at Goldco can help you find the right investment method for your state in life. If you decide that a silver IRA is right for you, Goldco can even point you in the direction of the right IRA-eligible silver coins and bars that you’re allowed to invest in.
Looking to the rest of this year and into next, the silver market forecast seems incredibly bright. The stage has been set for a surge in the silver price as rising silver demand and diminishing supply are providing the perfect set of factors for a nice bull market. Don’t get left behind as silver once again makes its move. Talk to the experts at Goldco today to see how you can make silver an important part of your retirement savings plan.