by Umar Farooq
Elements like gold and silver have held a certain special value in our minds and hearts since nearly the beginning of human history. The unique properties of silver make it a very useful “Industrial Commodity”, despite being classed as a precious metal. Demand for silver is built on industrial uses like photography, silverware, automobile industry, silverware, etc. More than 50 per cent of total mined silver comes from Mexico, Peru, China and Australia. Investing in metals is a good business especially silver these days.
If we look at the current market situation of silver, Silver markets fell a bit during the day on Monday, after initially going sideways. Silver of course is very sensitive to interest rate expectations of the United States, and of course geopolitical concerns. Silver was down 0.2 percent at $16.43 an ounce, after falling to a six-week low at $16.33.
“A general rule for silver and gold is that both precious metals follow cyclical patterns observed by watching the calendar. Simply put, silver and gold tend to peak in April before trending downward from there. This annual cycle suggests that silver has already peaked, or will do so very soon. But is the cycle applicable this year? As of 26 April (2017), future silvers were up just over 9% while gold was up closer to 10%. Just two days earlier, silver was up more than 10% year-on-year. But does a two-day downward trend reflect reality? That depends on who you ask. If you believe that the precious metal slide of silver will catch up to base metals and eventually be the dominant force moving forward, you are likely to feel that silver is on its way down. But if you are prone to believe base metals will stay up front, you might be getting ready to buy silver in May and June.” Tgdaily
“This spring, gold vastly outperformed silver, leaving the white metal looking for direction. The silver chart shows prices winding up within a huge wedge pattern. As the trading range gets narrower and narrower, it sets up a resolution in the form of a very strong directional move one way or the other. A few more weeks of consolidation are still possible before a decisive break out from the pattern. In 2016, silver was very strong in the first half of the year and weak in the second half. The first half of 2017 has been something of a wash, setting up something potentially big in the back half of the year.” moneymetals
The bottom-line is that now all of you are probably wondering whether it’s a good time to buy silver or not. Obviously, no one can provide a actual answer. Precious metals in general and silver in particular, tend to be volatile throughout the year. Even with an annual cycle to look at, you never really know where silver is going from one quarter to the next. Whether you should buy silver or not really depends on where you think base metals will go for the remainder of 2017. The demand for silver as a precious metal is not likely to have any real effect on the market until the start of the annual climb in December. Right now, it is all about base metals. If you are confident in Trump’s promises to rebuild infrastructure, buy silver. If you are confident that his tax package will become law, buy silver. If you’re not confident of either one, all you have left to look at is the annual cycle of base and precious metals.
by Umar Farooq