Silver Prices: Last Time This Happened, Silver Prices Soared 800%

Silver PricesHere’s Why Silver Prices Could Soar 800%

This is a message to silver investors: there’s something interesting happening with silver prices and it shouldn’t be ignored. It suggests the precious metal could soar well over 800%.

Before jumping to any conclusion, please look at the chart below and pay close attention to the blue line and the circled areas.

silver spot price CME

Chart courtesy of www.StockCharts.com

The blue line on the chart represents the 200-month moving average (MA) for spot silver prices.

With this in mind, if you look at the chart above, you will find that silver prices currently sit at their 200-month MA, and if you look closely, you’ll see a significant amount of support is present at the current level.

Now, go back to the circled area between 2003 and 2004. At that point, silver prices crossed above the 200-month MA. After this, we really saw silver prices move higher. They jumped 800%, reaching nearly $50.00 an ounce by 2011.

If silver prices are able to find support at their 200-month MA now, silver investors could be in for a big reward.

With all this said, investors have to keep three things in mind, and they are as follows:

  1. Silver prices finding support at the 200-month MA doesn’t mean the price will skyrocket all of a sudden. Looking back at the chart, after silver prices crossed above this moving average, it took about eight years for price to gain 800%. In the midst of all this, there was volatility as well.
  2. We have noticed the 200-month MA tested by silver prices several times in the last year and it has failed to break below. To confirm we have solid support, the precious metal price will have to move to the upside and break below the persistent downtrend that has been in place since mid-2013.
  3. If silver prices break below their 200-month MA, there could be some selling in the precious metal.

Looking Beyond the Charts…

While the silver prices chart above show bulls could have a great run ahead, this shouldn’t be the only reason to be bullish on the precious metal.

Know that the global economy is facing severe headwinds. As this continues, don’t be shocked to see silver become a safe haven among investors. It’s cheaper than gold and provides similar benefit.

Also, as it stands, it looks like we are headed toward a period of low interest rates—even negative interest rates—for a very long time. Precious metals, be it gold or silver, tend to perform well in a low-interest-rate environment.

I’m not surprised at all; we have seen momentum in silver prices since the beginning of 2016 that could continue throughout the year.

I am focused on silver mining companies. As I have repeatedly said in these pages, silver miners will be the biggest beneficiaries of higher silver prices.

Consider this: year-to-date, silver prices are up roughly 10%. If you look at the leading silver producer Pan American Silver Corp. (USA) (NASDAQ:PAAS), it’s up 40% in the same period. In other words, for every one-percent increase in silver prices, PAAS stock has increased four percent.

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