$50 Silver? 256% Rise in Silver Prices Not as Crazy as You Might Think

Silver Prices to SkyrocketSilver Prices to Skyrocket in 2016? It’s Possible

Silver prices remain low, but don’t be shocked if they move to the upside in 2016.

As it stands, there’s too much noise regarding precious metals being bad investments. One of the biggest reasons behind this narrative is that the Federal Reserve will continue to raise rates. We are told on a regular basis that when interest rates rise, you don’t need precious metals.

However, when I am looking at silver, I try to ignore the noise and pay attention to the price action. It reveals a lot about the precious metal.

Silver Prices Decline When Interest Rates Increase?

Take a look at the daily chart of silver prices below and pay close attention to the circled area.

The circled area is the day when the Federal Reserve raised its federal funds rate. If you were listening to the noise, you would have expected silver prices to drop through the floor. This didn’t happen.

In fact, we saw the complete opposite. Silver prices on the day of the Federal Reserve’s announcement increased by more than 3.5%, making it the best day for the precious metal since early October. It seems as if the interest rate hike was actually good for silver.

Silver - Spot Price Chart

Chart courtesy of www.StockCharts.com

With this said, look at the following weekly silver prices chart for the last three years and pay attention to the chart pattern and trading ranges.

Silver Chart

Chart courtesy of www.StockCharts.com

Without a doubt, silver prices have declined big-time over the last three years. Pay attention to the trend. Notice how the swings in silver prices were huge, but now they are much smaller?

In technical analysis, there’s a term for this; silver prices are forming a “falling wedge” pattern. This is a bullish chart pattern. Once the price breaks above the resistance line (the line at the top), we could see a solid move to the upside.

Now, looking at the following even longer-term silver price chart, a monthly chart, there are bullish developments in it, as well. Take a look at the chart and pay close attention to the circled areas.

Silver Price Chart

Chart courtesy of www.StockCharts.com

As it stands, silver prices are finding support around their 200-month moving average. Why is this worth mentioning? Well, the last time silver prices bounced off this moving average, we saw a massive move to the upside. Silver prices went from trading around $5.00 to close to $50.00 without ever touching this moving average until recently. Could it happen this time around as well? Time will tell.

Silver Price Forecast for 2016

Going into 2016, I remain bullish on silver. Right now, no one wants to talk about the gray precious metal, but there are solid developments occurring in the silver market.

You see, markets can remain irrational for a long time, but they eventually come to their senses. Remember the tech boom of the 1990s? Investors were giving ridiculous valuations to companies that didn’t even have a revenue model in place. A few years later, those companies were eventually priced according to their fundamentals—zero.

Silver seems severely undervalued, but not many realize it. The three charts above say bullish sentiment is slowly building up (or bears are waning), suggesting that while 2015 could be the year when silver prices bottom, 2016 and beyond could see silver prices move to the upside.

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