Silver Prices: Bottomed Out or Correcting?

Silver Prices: Bottomed Out or Correcting?Last week, Silver Investing News took a look at three reasons silver was able to record an impressive jump of nearly 20 percent in August, also touching on the metal’s prospects moving forward. 

At that time, the consensus appeared to be that silver would remain flat for the time being. Here’s an updated look at what market watchers, both bullish and bearish, believe may be in store for the white metal’s future.

Glass half full

One person sitting in the glass-half-full camp is technical analyst Peter Ullrich. He believes that the low point hit by gold in June “represents … the very bullish 55-month Fibonacci cycle low” and is a long-term buy signal, according to Mineweb.

Ullrich’s optimism also applies to silver. The news agency notes that he sees “the June low point for silver of $18.185 as its 55-month Fibonacci low” and believes that, like gold, silver is in a long-term uptrend.

Similarly, Jordan Roy Byrne of The Market Oracle states in an article published last week that “[i]t’s been two months since the bottom in precious metals and the sector remains comfortably above its lows.” Specifically, silver is $5 per ounce above its lows. On those grounds, he believes it’s “too late to expect a retest of the lows.” In fact, he notes, “the miners already tested their lows in early August which was five weeks after the bottom.”

Finally, for those more interested in lists, Money Morning’s Tony Daltorio recently laid out three reasons he believes silver will continue to outperform. Included on the list are:

  • US retail demand: Daltorio points to both silver exchange-traded fund holdings — which have increased by almost 6 percent this year — as well as US demand for silver coins as reasons silver prices will continue to rise.
  • Indian silver demand: India is also a source of physical silver demand, according to Daltorio. He notes that the country’s silver imports have “soared” since increased tariffs on gold were put in place.
  • China: the Asian nation helps raise silver prices in terms of both industrial demand and investor activity, as per Daltorio. Specifically, he states, China is the second-largest user of silver in the world and is a key component of the metal’s growth in the industrial field.

Glass half empty

However, as is to be expected, not everyone believes silver is headed upward.

As mentioned, last week Silver Investing News reported that writers from ETF Daily News, CNBC and the Financial Times have expressed the belief that although the white metal may rise somewhat, it is unlikely to break the $26 mark.

More recently, Incrementum, a Liechtenstein-based asset and wealth management advisory, expressed the same sentiment. Addressing the question of whether prices have hit bottom and are now moving upward, the firm suggests that “what has happened to gold, and to silver, is more of a correction than a foretaste of more to come,” according to Mineweb.

What’s an investor to do?

With experts on different pages regarding their expectations for silver, it’s difficult to say where the white metal may be headed. However, looking at the above examples it does seem clear that, compared to last week, more experts are looking favorably on silver. Whether that will last remains to be seen.

 

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

Related reading: 

3 Reasons for Silver’s Recent Price Rise

Silver Down Slightly as American Eagle Coin Sales Soar