Despite gold's weakness since late February, the price of silver held on for an entire week longer than gold did before topping out.
Silver prices waited until March before selling off in spades. They peaked at $18.49 on March 1, then quickly fell 7.9% to $16.93 by March 9. That more than doubled gold's 3.8% drop over the same period.
Of course, that's typical of silver and very much par for the course...
The trigger behind the silver price decline was likely a combination of the expected interest rate hike on Wednesday and a rallying U.S. dollar.
After a blistering 16.8% rally that took silver from $15.74 in late December all the way up to $18.49 on March 1, some kind of correction had to be in the cards.
Now it's here. Has it already run its course? I think it probably has.
If so, what will prompt the next leg up? I have a couple of thoughts on what the triggers might be. That's why I'll be sharing with you my silver price prediction for the rest of the year.
First, here's how silver trended on a daily basis last week...
Why the Price of Silver Dropped 4.1% Last Week
After closing at $17.74 on Friday, March 3, silver prices opened slightly higher on Monday at $17.81 despite steady gains in the dollar throughout the afternoon. The metal retreated to close the session at $17.75 for a slight 0.1% gain from the previous settlement.
On Tuesday, March 7, the dollar's bullishness kept weighing on the silver price. On Tuesday, the price opened lower at $17.66 and kept falling over the course of the session. It closed at $17.48 for a 1.5% loss.
Wednesday was similar as the dollar went into rally mode, surging above 102 by midday. Silver buyers couldn't compete with sellers, and the metal settled at $17.21 for another 1.5% loss.
Here's how the U.S. Dollar Index (DXY) moved last week...
Buyers returned on Thursday, March 9, once the dollar peaked in early morning trading. However, this wasn't enough to boost the price of silver, which fell below $17 for the first time since Jan. 26. It closed at $16.94 for a 1.6% loss.
Friday saw a slight gain as the dollar sharply sold off. That boosted silver prices by 0.5% to close at $17.02. The metal still logged a weekly loss of 4.1%.
In my view, Friday likely marked the bottom of silver's correction. While we may see some day-to-day dips, I think silver prices will head much higher by the end of the year.
Here are my midyear and end-of-the-year silver price targets...
Our 2017 Silver Price Forecast
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As this chart below shows, the psychologically important $17 mark has acted as a support level for silver prices over the last five months...
We've also witnessed a rapid and sizable correction over the past two weeks, erasing 8% from silver's price. Sentiment is in the toilet, and there are few sellers left.
That's also caused the gold/silver ratio to violently correct back up to 71 from 67.5. I think that will be an interim peak, and I expect the ratio to start once again to work its way downwards.
This chart shows how the gold/silver ratio has trended since late September 2016...
If silver prices stabilize and rally after the likely Fed rate hike, then we could see them rise to $19 before June 2017. And that would be a great level from which it could catapult even higher, possibly reaching $22-$24 by the end of the year.
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