Silver Prices Outlook Looks Bright
Silver prices could be setting up for major upside ahead. Don’t be too bothered by what has happened to the precious metal over the past few weeks.
You have to remember one thing: a pullback in prices is very normal. If silver prices continuously moved higher, witnessing an almost vertical rise like they did in April, it would mean too many speculators are present in the gray metal.
You should be asking whether the prevailing trend has been broken. If that happens, there may be a reason to be worried.
Please look at the chart below, which is very self-explanatory.
Chart courtesy of www.StockCharts.com
The trend in silver prices that began in early 2016 remains intact. Also, the precious metal’s price remains above its 200-day moving average. This suggests a long-term trend is still pointing upward.
When I am looking at silver prices, I am thinking long term. I am really not paying attention to the movement on a daily or weekly basis.
There’s one thing that’s working in favor of silver: the demand remains resilient despite silver prices being down significantly from the highs made in 2011.
Consider silver sales at the Perth Mint.
In April, the mint sold 1.16 million ounces of silver. This was 146% higher than what it sold in the same period a year ago. In April 2015, it sold 472,273 ounces of silver.
Between January and April, the Perth Mint sold 5.44 million ounces of silver. In the same period a year earlier, silver sales amounted to just 2.08 million ounces. This represents an increase of more than 160%! (Source: “Perth Mint Gold and Silver Bullion Sales in April,” Coin News, May 9, 2016.)
Silver sales at the U.S. Mint have been astonishing, too. Year-to-date, the mint has sold 22.83 million ounces of silver. In the same period a year ago, the U.S. Mint sold 16.96 million ounces. This represents an increase of 34.61% year-over-year. (Source: “Bullion Sales/Mintage Figures,” U.S. Mint, last accessed May 31, 2016.)
While mint sales are great, there’s one thing that should be watched closely as well. India’s appetite for silver is getting bigger by the month. In April, the country imported $218.98 million worth of silver. (Source: “Quick Estimates For Selected Major Commodities For April 2016,” India’s Ministry of Commerce and Industry, last accessed May 31, 2016.)
To give you some perspective on how big this is, silver prices average about $16.00 an ounce. That means $218.98 million worth gets you about 13.7 million ounces, or roughly 425 tonnes, of silver!
Silver Price Outlook: Where’s the Opportunity?
To me, it is shocking how silver continues to be ignored. The gray precious metal, when looked at on a risk-to-reward basis, could provide massive returns.
I truly believe the worst is behind us, though I wouldn’t be surprised if the silver prices test their lows made in late 2015. I am looking for silver prices to hit $50.00 in the next few years.
With this in mind, it may be a wise idea to look at silver mining companies. As silver prices move to the upside, silver miners will benefit the most and provide an even better return than just owning silver bullion.