Why Silver Prices in 2017 Will Soar 25.8%

If you own silver, last week's returns restored your faith in silver prices in 2017.

After bottoming near $16.75 on Jan. 26, the metal shot higher to $17.60 as investors retreated from stocks and the U.S. dollar. As of Friday, Feb. 3, the price of silver is up 9.3% year to date (YTD).

Of course, President Trump gave silver watchers plenty of reasons to buy. Trump signed no less than 19 executive orders, ranging from travel bans on people from seven mostly Muslim nations to reorganizing the National and Homeland Security Councils.

The list is, of course, much longer. But with so many of Trump's controversial moves, investors are on edge about what comes next. And as we know, markets hate uncertainty.

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It's been great for the silver price, and I expect this to be a continuing theme through 2017 and beyond. That's why we're going to identify four factors that indicate silver prices will climb 25.8% in 2017.

First, here's why the price of silver jumped higher last week...

Silver Prices in 2017 Continued Their Rise Last Week

The silver price started out last week with a whimper, but ended it with a bang.

The precious metal opened on Monday, Jan. 30, at $17.10. It bounced around a little through the day to close just 0.2% lower at $17.07.

The next day, the price of silver surged early to open at $17.36 and kept climbing higher. These gains came after Trump commented on how the dollar is too strong and needs to be weaker to help the United States compete in trade. By the close, silver prices scored a big 2.8% gain and settled at $17.54.

Here's a view of the U.S. Dollar Index from Monday, Jan. 30, to Friday, Feb. 3...

silver prices in 2017

While flat overall, Wednesday held up silver prices and reconfirmed the metal's strength. They opened trading at $17.56 and dipped 0.2% lower from Thursday's close to settle at $17.51.

Helped by the softer dollar, the silver price on Thursday peaked for the week. It opened at $17.63 then trended downward to close at $17.45 for a 0.3% loss.

On Friday, Feb. 3, the price of silver gained 0.2% to settle at $17.48. With that, it logged a weekly gain of 2% from its close the previous Friday.

And there's no doubt that silver prices in 2017 will run even higher. My silver price prediction shows the metal climbing another 25.8% by the end of the year.

Here are the four factors that support our prediction...

4 Reasons Why Silver Prices in 2017 Will Run 25.8% Higher

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The first factor supporting our prediction is silver's 50-day moving average.

Silver prices have been acting well, and even better than gold prices, on a technical chart basis...

silver prices in 2017

After a short-term pullback that pulled prices lower to its 50-day moving average near $16.70, the metal has rallied. This has set a new high than in mid-January, and we can see it reaching for its 200-day moving average at $17.94 on strong momentum.

The second bullish factor for the price of silver is rising industrial demand. We know that industrial demand for silver requires about 50% of the total supply, which rose in 2016. Electronics, solar panels, and automobile production are among the applications that are seeing bullish growth.

The third is increasing bullish bets. According to Commitment of Traders Reports, silver fund managers have been upping their long bets on silver. Last week, net longs increased by about 8% overall from the previous week.

And the fourth factor is silver's performance versus the stock market. As the next chart shows, a bottom was established for silver prices in late December. You can also see that as the bottom was established, silver stocks zoomed higher a lot more quickly than silver prices...

silver prices in 2017

While higher stock prices typically mean silver demand is lower, this can sometimes be a bullish indicator for even higher silver prices. The record-high stock market recently could scare investors into thinking a bubble is imminent. That often sends investors into safe havens like silver.

We've already met the target of $17.25 I pointed to last week. Overall, I think $18 or even $19 could be reached in Q1. For later this year, I still have $22 in my sights. That would be a 25.8% rise from last Friday's closing price of $17.48.

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