Silver Prices Today Drop Ahead of Election

Silver prices today (Monday) are slipping in morning trading ahead of the election, as the precious metal loses some of last week's momentum.

Silver prices are down nearly 1%, or $0.18, today. Despite the pullback, the price of silver has managed to remain above the $18 level, a price it hasn't seen since the start of October.

After peaking at $20.10 in early August, silver began correcting and lost 14% when it hit a low of $17.28 in early October.

silver prices todayIn the last five trading days, the silver price has soared from $17.60 to a high of $18.70.

The Fed's decision to hold on a rate hike in November boosted silver prices, especially in the early part of the week.

With the highly watched and hotly contested upcoming U.S. presidential election, silver could be primed for more gains.

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Silver prices could climb regardless of who wins. But my sense is that a win by the "anti-establishment" Trump would drive silver prices higher than a win by Clinton. And if we get some sort of contesting of results, all precious metals will soar.

Of course, gains in silver prices today will be on the heels of gains in gold. But there are also fundamental drivers that are set to boost silver independently of gold in the months and years ahead...

How Silver Prices Today Are Trending

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Silver started out last week in quiet trading. It opened up on the morning of Halloween, then moved sideways with a slight upward bias to close at $17.87.

Then on Tuesday as the Fed's FOMC meeting began, silver popped. By 8:00 a.m., it had already run up to $18.22. It peaked at $18.45 by noon, then settled back slightly to close at $18.34.

On Wednesday, silver began trading slightly higher at $18.49. Interestingly, it peaked at 1 p.m. at $18.67, before the Fed's news release. By 2 p.m., it had retreated to $18.62, and by the 5 p.m. close, it had bottomed for the day at $18.45.

Then on Thursday, along with gold, silver prices dropped down to $18.03. That sell-off came on the heels of the news that the UK High Court decided Britain couldn't exit the EU without a ratifying vote from parliament. It raised the possibility that Brexit may not happen, or at least may be delayed. Silver's safe-haven appeal diminished, but not for very long.

From there, silver prices shot higher. By midday, they were back to $18.25, then kept climbing into the close to reach $18.32.

On Friday, silver opened at $18.29 and closed even higher at $18.40.

Now that the election is in full focus, here's where I see silver prices heading depending on which candidate wins the White House...

Where Silver Prices Are Headed After the Election

Now let's look at silver's recent technical price action.

silver prices

Unlike gold, silver's correction in early October pulled it down, but it managed to stay somewhat higher than its 200-day moving average. By comparison, gold consolidated right at its 200-day moving average.

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Then in the last few days, like gold, silver has rallied to regain its 50-day moving average within just a couple of trading sessions. The RSI and MACD are confirming upward momentum. So technically, its price action is looking strong and reinforcing the odds that its 16% correction from the August highs is over.

A recent report published by ETF Securities indicates its analysts expect silver prices to trade between $22 and $24 in 2017, outpacing the roughly 10% gain they expect from gold to reach about $1,400. Part of their reasoning is that industrial demand should push prices higher, helping the metal to outperform its golden counterpart.

In that same vein, HSBC noted that a report from the International Energy Agency had raised its five-year forecast for renewable energy. The agency raised its forecast for renewables to grow 13% more between 2015 and 2021 than in last year's prediction. With over 500,000 solar panels installed on a daily basis in 2015, silver should see strong demand as it is crucial in the manufacture of solar panels.

In the very near term, as we head into Tuesday's election, I think silver could run up as high as $20 in the case of a Clinton victory, and perhaps even $22 if voters put Trump into the White House.

But either way, I think $22 by year's end ultimately looks quite achievable.

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