In silver investing news today (Wednesday, Feb. 1), silver prices are down 0.42% and trading at $17.47 per ounce. That's a drop from yesterday's close of $17.54 - the highest settlement for an active futures contract since Nov. 10, 2016.
But the biggest silver price news of the day has to do with the metal's final January numbers. And these numbers support Money Morning Resource Specialist Peter Krauth's prediction that the price of silver will climb another 26% in 2017.
Here's more on silver's January performance...
The Biggest Silver Investing News Today
The biggest news today is that silver prices just posted their biggest monthly gain in seven months.
According to data from FactSet, the price of silver rose 9.7% in January. That widely outpaced the gold price's 5.2% rise. It also marks silver's biggest monthly gain for active futures contracts since June 2016. During that month, silver prices surged 15.9%.
The 9.7% leap in the price of silver last month came despite the stock market hitting its highest level ever on Jan. 25. That was when the Dow Jones Industrial Average jumped above the 20,000 mark for the first time in history. When the stock market rallies, demand for safe havens like silver declines because investors are putting their money in stocks instead.
But this past week's market volatility caused a late-month rally in the silver price. On Monday, Jan. 30, the Dow Jones fell 0.6% - or 122.65 points - for its biggest one-day drop since before Election Day on Nov. 8. This has spiked silver demand, pushing the price of silver 2% higher from last Friday's $17.14 close.
Luckily for silver investors, these gains are set to continue throughout the year. The rally won't just come from stock market volatility under President Donald Trump - it will also come from technical factors that are starting to take a bullish shape.
"There are some technical drivers that should support silver prices in the near and longer term," Krauth - a veteran gold and silver trader with over two decades of experience - said on Jan. 30.
Here are the two technical metrics that indicate a 27% climb for silver prices by the end of Q2 2017...
Follow These Two Metrics While the Silver Price Soars 27% in 2017
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The first important silver price indicator is the 50-day moving average.
In general, moving averages let traders track the movement of a stock or commodity by smoothing out short-term volatility. This lets them identify the direction of a price's trend, which they use in their favor to make more profitable trades.
To calculate a 50-day moving average, you just add up the closing silver prices from the past 50 trading sessions and divide it by 50. As of Feb. 1, the 50-day moving average for silver is $16.69. The fact that the current silver price of $17.47 is above the 50-day moving average is a bullish indicator.
According to Krauth, the average acts as a support level for the price of silver. In other words, the price could fall to $16.69 but likely won't go any lower than that.
"Silver could come down and 'test' that level, but I would not expect to see it go much lower before heading higher again," Krauth said.
The second metric is the gold/silver ratio - one of the most useful indicators in the precious metals market.
The ratio lets you calculate the value of gold and silver relative to each other. To calculate it, you simply divide the current gold price by the current silver price. For example, a gold/silver ratio of 95 means that 95 ounces of silver have the same value as one ounce of gold. A lower ratio is bullish for silver prices because it shows it's undervalued relative to gold.
And the ratio has been steadily declining over the last year. From February 2016 to today (Feb. 1, 2017), the ratio has plunged 7.6% from 74.92 to 69.21.
It's only going lower from here. Krauth sees it falling as low as 60 sometime in 2017.
"Since the precious metals bull market began about 15 years ago, the ratio has averaged about 60 overall," Krauth said. "I think we're likely to get much closer to that level in 2017, with the silver price catching up to gold."
With these two ratios in mind, Krauth projects the price of silver to climb 27% to $22 an ounce by the end of the second quarter at the earliest.
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