Subscribe to Money Morning get daily headlines subscribe now! Money Morning Private Briefing today's private briefing

The Biggest Reason the Price of Silver Will Keep Climbing in 2016

The price of silver has climbed 12% in 2016, and we found one major reason why silver prices will continue to rise this year.

price of silverBut before we get to silver's biggest upcoming catalyst, here's what has pushed silver prices higher this year…

Worries about global economies, loss of confidence in central banks, and a slower pace of interest rate hikes from the U.S. Federal Reserve have all boosted silver prices in 2016.

Spot silver rose 0.2% to $15.63 an ounce Friday morning. That pushed 2016's gains to more than 12% year to date. Silver prices hit their high for the year on March 7, when spot silver prices reached $15.66 an ounce.

Increasing concerns over a liquidity crunch in China, soft corporate earnings, and global woes have driven investors to safe-haven assets like silver. Silver is an actual store of value and it holds up better than riskier assets when markets are rocky.

Silver, like gold, is coveted as an insurance policy of sorts when markets fall. During the 2008 financial crisis, a time when investors were scrambling for safe havens, the silver price doubled.

The Silver Institute recently said it believes the silver price should "find solid ground this year" and that the silver deficit will accelerate. The deficit has been building for more than a year. In the first 11 months of 2015, U.S. silver mine production dropped by roughly 8%, according to data from the U.S. Geological Survey. Dwindling supply should continue to drive silver prices higher.

The Institute also sees higher industrial demand this year. Silver is used in solar panels, plastic production, jewelry, and coins. In addition, record demand out of India is expected.

Silver consumption is already off to a strong start this year…

In the first week of March, the U.S. Mint sold one million bullion American Silver Eagles to its network of authorized distributors. Year-to-date sales, as of March 10, reached 12 million coins. That's 24.7% higher than the same time period in 2015.

Last year's American Silver Eagles notched an all-time sales record of 47 million coins. At this year's pace, the Mint is on track to report another year of record silver sales.

As the price of silver approaches the psychologically important $16 level, Money Morning Resource Investing Specialist Peter Krauth says a "host of fundamental and sentimental drivers are at work helping to push silver prices higher and odds are good they will remain supportive."

But there is one factor above all else that will contribute to the price of silver climbing even higher from here…

The Biggest Catalyst for the Price of Silver in 2016

Join the conversation. Click here to jump to comments…

Leave a Reply

Your email address will not be published. Required fields are marked *


two × = 6

Some HTML is OK