What's Moving the Silver Price Today

Despite a strong recent surge and continued strength in gold, the silver price today hasn't been able to muster the same strength. Last week was one where silver did not take its cue from gold, as it normally does.

Monday started out with a strong reversal after Dec. 4's powerful 3.2% silver price gain, with silver dropping 2.6%.

The next four trading days saw continued weakness that ended with this past Friday's close below the significant psychological level of $14.

Here's how the silver price action looked:

silver-stock-chart-graph

You can see that once silver lost its momentum, it just couldn't seem to regain it.

When you compare silver's action to gold and the broader market, here's how it looked:

silver-shares-stock-chart

Consider the comparison with stocks as measured by the S&P 500. Last week, both the silver price and the S&P 500 were down an almost equal 3.5%, while gold only fell 0.25%. And that was despite the expected Fed rate hike this week.

Meanwhile, the Volatility S&P 500 VIX Index has absolutely soared, running up from 16 to 24, marking a full 50% gain. Here again, I attribute most of this to the anticipation and uncertainty surrounding the upcoming Fed rate hike decision.

The week ended on Friday, Dec. 11, with silver buyers dominated by sellers. Silver couldn't attract sufficient buying to put on the same show as gold. Instead, it meandered around $13.90 at the end of last week, below the significant $14 level.

The silver price today is up about $0.60 to $13.70.

But news out of Asia looks supportive for silver prices.

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What's Next for the Silver Price

Metals Focus, a metals consultancy, reported last week that India's silver imports had fallen in November to about 500 tonnes. That marks a four-month low as well as a 55% decrease year over year.

And while at first glance this looks like bearish news, the fact is since the start of 2015, India has imported a massive 6,600 tonnes of silver bullion in just the first 11 months, already topping 2014's year-to-date levels by 7%, and ahead of full-year levels. And that doesn't even account for December purchases yet.

Meanwhile, a number of silver market participants have given their predictions for 2016 based on market indicators.

Erica Rannestad, senior analyst at Thomson Reuters GFMS, expects a physical silver deficit of 42.7 million ounces this year, which should help drive an average price of $15.51 in 2015. As for next year, Thomson Reuters GFMS expects silver to average $16.80.

For their part, Natixis expects the silver price to average $12.80, CIBC forecasts $15 per ounce, HSBC foresees $18.25, and Capital Economics thinks silver could hit $20 by the end of 2016.

Remember, silver is an industrial metal as well as a monetary metal. At various points in time, it may tend to act more like one than the other.

But as gold resumes its role as a store of wealth, I expect silver will not only tag along, it's likely to outperform.

Indeed, this week we'll have to watch for the silver price's reaction to the Fed's rate hike decision for near-term direction.

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