With the silver price in 2017 now up 13.9% this year, silver has become attractive for investors again.
The precious metal spent the last trading week above $18, climbing first, then holding steady even as the gold price retreated and the dollar strengthened.
I've been telling you that silver prices have enormous potential, and as we move forward in this precious metals bull market, the price of silver is likely to outperform the price of gold.
Keep in mind, though, that silver is volatile. One thing is certain; it won't rise in a straight line. It's going to move much higher, but that's likely to happen in fits and starts.
Silver's looking really strong right now, but, as I'll show you, it may have gotten a bit ahead of itself in the very near term. A correction would not be a surprise, and for traders and investors, that should be treated as a buying opportunity.
Let's take a look at the silver price performance last week, then I'll give you my specific silver price target for the end of 2017.
Silver Price in 2017 Tacks on Another 2.6% Weekly Gain
After closing at $17.75 on Friday, March 24, the metal opened higher on Monday at $17.96. Prices powered throughout the day to close at $18.09 for a 1.9% gain.
On Tuesday, March 28, the price of silver opened lower but managed to push higher in morning trading. It surged to $18.18 - a level not seen since March 1. By the close, the metal was at $18.16 for a 0.4% gain.
Overnight weakness wasn't enough to keep silver prices from posting more gains during the Wednesday session. After opening at $18.11, the metal grinded 0.3% higher to settle at $18.21.
All of this came despite consistent gains in the U.S. Dollar Index (DXY), which you can see in this chart here...
The dollar eventually overwhelmed silver prices on Thursday. As the DXY surged to 100.5, prices fell 0.7% to close the day at $18.09.
On Friday, March 31, a weaker dollar pushed the price of silver higher. It ended the week at $18.22 for a 0.7% daily gain and 2.6% weekly gain.
With last week's jump back above the $18 mark, it's clear that silver market sentiment is significantly improving. This shift is worth looking at more closely, as it can tell us a lot about where the silver price in 2017 is heading.
Here's our prediction for where the metal will be by the end of the year...
Our Bold New 2017 Silver Price Target
[mmpazkzone name="end-story-hostage" network="9794" site="307044" id="138536" type="4"]
Several credible sources have shown that traders and investors are growing more confident in the silver market.
In a Bloomberg article from March 16, Gregor Gregersen, founder of Singapore-based Silver Bullion Pte., said the silver market is extremely undervalued compared to the gold market. He went on to say silver has plenty of room to run as more investors flood the market due to improving sentiment.
Despite being about already-improving sentiment, the report boosted sentiment even more.
SentimenTrader's proprietary Optimism Index on silver recently hit 72, whereas excessive optimism is considered breached once it hits 75. At the same time, commercial traders - often referred to as "smart money" - are near long-term extreme short positions.
Now, none of this means the silver price has to crash. It could simply back up a little and consolidate sideways to work off its excessive optimism before moving higher.
Looking at the gold/silver ratio, we've just seen a strong move higher for silver prices relative to gold prices. If silver slows and gold marches higher, the ratio could rise before again working its way lower...
As for the silver price itself, we do see the RSI momentum indicator stalling and the possibility of a lower high in silver recently, compared to late February's high at $18.50.
Therefore, it wouldn't be a surprise to see silver stall a bit at this juncture. If we see it back off, I'd be tempted to treat that as a buying opportunity.
But I think silver could still tack on another $4 this year to cross the $22 mark by the end of 2017. That would offer a 20.4% return to investors if they bought in at the current $18.27 price.
Rare Gold Anomaly: The first time it created $1.25 billion in new wealth virtually overnight. The second time, it created a cash windfall of $6 billion - both times making in-the-know investors flat-out millionaires. And it's about to happen again, only this time we expect the cash windfall to reach $13 billion. If you take advantage of this rare gold anomaly right now, you, too, could walk away a millionaire. Details here...
Follow Money Morning on Twitter @moneymorning, Facebook, and LinkedIn.