Most likely, all three factors are weighing in on the silver trend, driving it higher than other assets when the tide is pushing in a bullish direction.
What’s the Outlook for Silver?
While silver may be the current commodity to beat, in the grand scheme of things, that recent leadership may be irrelevant. The commodity is still in a long-term downtrend, and with fears of inflation being unmerited so far, it’s not as if precious metals are in their proverbial sweet spot.
Currency unrest (or lack thereof) isn’t going to help much, either. While renewed tensions in the Middle East as well as Ukraine on top of a potential default on Argentine debt are dramatic on the surface, none of those factors have sparked any fears of currency volatility that would necessitate the need for gold or silver. Indeed, all that overseas turmoil has bolstered the value of the U.S. dollar, by 2.4% since early May. Because silver and gold are priced in U.S. dollars, the dollar’s rally has made the advance from silver and gold a poorly-supported move.
Realistically, the slide we’ve seen from silver and the iShares Silver Trust over the past couple of weeks is apt to continue until silver reaches the key $18.67/ounce mark. That’s where the metal has found a floor three times since July of last year. Testing that support for a fourth time won’t be all that interesting, but should silver break under the $18.67 mark, it’s apt to open the selling floodgates. Only a break above $21.62 per ounce would kick-start a new rally, though that seems like the less likely outcome from here.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.