Price of Silver Today Drops, but Will Rebound in 2017

The price of silver today (Monday) is down marginally to $16.69 in afternoon trading. And while silver is known as more volatile when compared to gold, there are times when the opposite is true.

I think we're in the midst of one of those moments right now.

There are multiple ways of measuring and comparing, as well as of forecasting, exactly this kind of behavior.

price of silver todayStill, silver's been facing the dual headwinds of a rallying dollar and a propped-up stock market. The investing herd has been flocking to these asset classes, discarding silver along the way.

But for some of the same reasons gold is ultimately heading higher, so are silver prices. In fact, the price of silver may have less overall downside than gold because of its "dual mandate" as a safe haven and an industrial metal.

Editor's Note: A completely unique gold play is forming in the markets. And it's so rare that it's only the third time in 20 years that it's happened. If you get in now, you could see a share of upwards of $13 billion in cash windfalls. Read more.

And I think that's part of what's been going on recently with silver prices this month.

I'll show you with both performance and ratio charts why I think silver is still poised to outperform gold, even in the near and medium terms.

But first, here's a look at what's moving the price of silver today...

How the Price of Silver Today Is Trending

Unlike gold, silver's price movements have been more contained over the past week of trading.

The precious metal opened last Monday at $16.63 and moved pretty much sideways to close out at $16.56.

Tuesday brought weakness early in the morning, with silver starting its NY trading day at $16.45. It bottomed at $16.38 at 9:00 a.m., then reversed and headed higher to close at $16.62.

Wednesday had silver give that back. Despite opening at $16.65, silver weakened through the day to close at $16.48.

Thursday's open was even lower at $16.34, but that was followed by buying pressure that took silver up to $16.48 by 5:00 p.m.

Then Friday, silver started out just as weak at $16.34, but then popped 2.5% by noon to reach $16.75. By late afternoon, it was still trading hands around $16.68, having recuperated from the lows of the previous day.

Silver prices today were mostly flat, down just 0.2% in late afternoon trading.

Now that we've looked at the recent movements in the price of silver, here's where I see the precious metal heading from here...

Where the Price of Silver Is Headed

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So now let's look at how silver's been holding up relatively better than gold recently.

Using SLV and GLD as proxies for silver and gold, here's a chart comparing the two over the past week.

i-shares

As you can see, as gold actually lost ground on the week, down by 1%, silver actually rose by 0.75%; not bad given that it typically would have lost 2%.

And if we compare the last month, a similar picture emerges.

price of silver today

Over this time frame, gold lost 10%, while silver was down just 11%. The normal two-for-one leverage would have typically caused silver to drop by 20%, so this performance is remarkable.

And here's what I think is going on.

Just two weeks ago, I told you I thought the gold-silver ratio may top out as it reached 73.

Here's what I said:

"The current level, which indicates that it takes nearly 73 silver ounces to buy one gold ounce, is where we've witnessed support and resistance previously."

gold-silver-3

Since then, the ratio has headed downward from 73 to its current 70, indicating silver was undervalued relative to gold and was being repriced accordingly.

I think we could see continued pressure on silver as we approach the upcoming Fed meeting and rate hike decision. But after that, we could get a "sell the rumor, buy the news" reaction and see silver rally.

With that in mind, I think we may see silver bottom soon, and begin a new run up that could take silver to the $19 range by Q1 next year.

Up Next: An incredibly rare gold market anomaly is shaping up in the markets as we speak - one that has occurred ONLY twice in the past 20 years. And it's about to happen again. Details here...

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