The big silver price news of 2017 so far has been its surprising outperformance of gold.
After futures hit a low of $15.76 on Dec. 23, 2016, silver prices have shot higher, recently reaching $17.93. That's a gain of 13.8%. Gold prices, on the other hand, have only climbed 8.8% over the same period.
And in the month of January alone, the price of silver was up 6.5%. That again handily beat gold's 4.7% return.
I've been saying that silver is looking good technically and is the better bargain of the two metals. With some luck, the outperformance we've seen of late will continue going forward.
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Silver's technical setup is very favorable from several perspectives. We'll explore how two of the most important technical indicators - the 200-day moving average and gold/silver ratio - support our bullish silver price target by the end of 2017.
But first, let's look at how it's done over the past trading week...
The Biggest Silver Price News Last Week (Feb. 6 - Feb. 10)
For the most part, silver prices are coming off a strong week.
On Monday, Feb. 6, silver opened higher at $17.61. From there, it just kept climbing to reach $17.71 by the close. That marked a 1.3% gain from the $17.48 settlement on Friday, Feb. 3.
The price of silver saw wild swings on Tuesday, dropping to $17.56 in pre-market trading then bouncing back to open at $17.63. From there, it rallied to peak at $17.75 for the day. It eventually settled at $17.67 for a small 0.2% loss from the previous close.
Wednesday saw renewed strength, with silver opening higher at $17.76. It retreated $0.01 to $17.75 by the close, but the silver price still logged a 0.5% gain on the day.
On Thursday, Feb. 9, the price of silver opened with choppy trading. It started at $17.74, quickly peaking at $17.80 by 9:00 a.m., and fell back down to $17.64. That "negative shock" was undoubtedly triggered by a sudden surge in the U.S. dollar around 10:00 a.m., shown in this chart here...
By 1:00 p.m., silver prices had recovered slightly to $17.71, but eventually closed 0.8% lower at $17.61.
Editor's Note: This Silver Price News Won't Prevent a Bull Run in 2017
Then on Friday, after opening slightly lower at $17.58, silver surged as the dollar retreated. While the dollar fell to 100.60 by midday, the price of silver jumped to $17.97. The metal closed at $17.93 for a 1.8% gain. With that, the silver price posted a weekly rise of 2.6%.
Despite any future movements in the dollar, we're bullish on silver prices in 2017. That's because the 200-day moving average and gold/silver ratio have been acting in a way that points to a continued rally this year.
Here's just how high our 2017 silver price target is...
Our 2017 Silver Price Prediction
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As I said earlier, silver's technical price action is looking strong.
Recent price action has pulled silver up very close to its 200-day moving average at $17.95...
Given the strength and only minor correction since silver's late December bottom, a rest at this juncture would be healthy. There's a strong chance the 200-day moving average will act as overhead resistance, keeping silver from heading higher at least for a while.
In late January, the gold/silver ratio converged to about the 70.60 level, along with silver's 50-day and 200-day moving averages. At the time, I proposed that, given the bullish fundamentals for silver, the gold/silver ratio was likely going to peak again soon.
Here we are, just two weeks later, and the ratio is currently down from 70.60 to 68.70. That has me especially confident that the silver price will challenge $17.95, its 200-day moving average. However, this could still act as a ceiling, limiting further gains temporarily.
But again, these pullbacks are short term and fundamentally important for a long-term rise this year.
I still expect we could see my $18 and even $19 targets being reached this quarter. Beyond that, I see the price of silver climbing to $22 later this year. That would mark a 22.7% gain from Friday's close of $17.93.
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