Last week, I pointed out how silver had been outshining gold for the last few weeks and even months. And now silver prices today (Monday) are up another 1.4% to roughly $17.05 in morning trading.
The strength in silver prices has carried over from last week.
In fact, if you compare the two metals over multiple time periods, like one week, one month, three months, and even six months, silver's behavior looks even more impressive.
What's going on? Well I think there are two reasons. First, after peaking in early 2011, silver prices suffered much greater losses than gold when they bottomed a year ago. So silver had become extremely oversold.
Second, silver's multiple applications (other than a store of wealth) mean there are a number of sources of demand that go beyond what is the case for gold.
Remember, the price of silver is a whole lot more volatile than gold. But that's precisely what can make it so attractive. With reasonably good timing and some patience, silver investing can offer returns that are difficult to match almost anywhere.
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Before we look at what's next for silver prices today, here's a look at how the price of silver has been trending...
Silver Prices Today Climb Again
Silver prices had a surprising performance last week...
Early in the week brought your garden-variety volatility. On Monday, the silver price opened down at $16.63, then saw buying pressure through the day, taking it to $16.71 by the close.
Tuesday was the reverse, with silver opening at $16.81, then succumbing to midday pressure. It traded down to $16.69 by the close that afternoon.
Wednesday was the big surprise. It was pretty run of the mill overnight trading that took silver prices to $16.75 by the open. But from there it exploded higher to reach $17.15 within the first two hours of trading. It peaked at $17.18 by 1:00 p.m., then weakened a little to close at $17.09. Interestingly, the U.S. dollar didn't fluctuate all that much, trending slowly downward on the day.
Thursday actually saw silver prices give up some of those gains. After opening at $17.04, the precious metal kept heading downward to close sub-$17 at $16.99.
Friday brought a weaker open to silver at $16.88. It quickly spiked to $17.08 at 8:30 a.m., then took its cue from gold and gave back nearly $0.28 to trade down to $16.80 by midafternoon.
Silver prices today are back over $17 as traders now switch their focus to the FOMC meeting this week. Here's where I see the price of silver heading now...
Where Silver Prices Head from Here
Here's a look at the gold versus silver performance over multiple time frames.
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Over the past week, where gold was slightly lower by 0.5%, silver has been up by nearly 1.5%.
Now if we pull a little further back to one month, silver has outperformed gold by about 2% here as well.
Let's move to a three-month perspective and see what that looks like.
Over this time frame, both metals are down, but silver has still outperformed gold by about 2%.
Over the past six months, silver clearly outperformed gold on the upside in late June, nearly tripling gold's return. And since then, it's down about 2%, while gold is off about 8%.
And finally, on a year-to-date basis, gold is up 10%, while silver is up about 23%. That's actually much closer to par for the course. In fact, it's the downside protection that's been the most impressive, as both metals have been correcting since July-August.
So we've just been through a rare period when silver actually outperformed gold while correcting. As the gold/silver ratio continues to correct to the downside, I'd also expect this outperformance to continue.
If gold does form a base near its current level, which may have already bottomed, silver should be primed for great returns in the next few months. And if precious metals turn positive on the dime of a rate hike, we could well see $19 silver by the time Trump takes office.
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