The silver price today (Monday, May 15) is continuing the rally that started last Wednesday, May 10. It's up a big 2.2% this morning and trading at $16.77 - its highest price since May 2 - after North Korea conducted another missile test over the weekend.
The recent rebound begs the question: Has the 9.4% silver price drop from the April 17 peak of $18.51 finally run its course?
Although last week started off badly, silver prices ended the week 0.8% higher. That could look like a bottom for this correction cycle.
Looking at the latest Commitment of Traders (COT) report, while it has come off extreme bullish levels, the metal still needs to work off some of the recent bearish sentiment.
At the same time, technical price action certainly indicates the metal is due for a rally based on a couple of metrics.
The silver price couldn't catch a break until last week. It's tough to say whether or not the current correction is completely over, but we're likely looking at a relief rally at this point.
As we look farther out, the prospects for this metal are more promising than ever given how fundamental demand is set to outstrip supply this year.
We'll get into those factors and why they reaffirm my bullish price target for the end of 2017. First, let's look at silver's important rebound last week...
Silver Price Today Continues Last Week's Three-Day Rebound
After closing at $16.27 on Friday, May 5, the price of silver got a generous weekend bump last week thanks to the French election. But it opened lower on Monday, May 8, as higher global markets urged investors away from safe havens like silver. The metal eventually closed the session at $16.20 for a 0.4% loss.
Tuesday brought out more sellers, and despite an overnight bounce, silver still opened lower at $16.15. More selling pressure forced prices down to an intraday low of $16.06 - the lowest since bottoming at $15.99 on Dec. 30, 2016. Silver closed Tuesday 0.3% lower at $16.15.
The silver price weakness came from the strengthening U.S. Dollar Index (DXY), which jumped over 50 basis points from a low of 99.10 early on Tuesday to a peak of 99.68 by mid-afternoon...
However, Wednesday saw a strong open as silver started the session at $16.27. Despite some weakness throughout the day, prices closed at $16.17 for a slight 0.1% gain.
On Thursday, May 11, silver prices really picked up momentum. They opened at $16.32 and managed to settle at $16.30 for a 0.8% rise by the close. These gains came despite steadiness in the dollar.
Must See: The Free 2017 Guide to Silver and Gold Investing
As the DXY sagged on Friday, the price of silver rallied higher during the session. It climbed 0.6% to close the day at $16.40. That capped off the metal's 0.8% weekly gain.
And the silver price today is already posting strong gains. It's up 2.2% to $16.77 thanks mostly to renewed fears of a nuclear threat after North Korea tested another ballistic missile over the weekend. A close at this silver price level would mark the highest settlement in nearly two weeks.
Although silver prices started last week on a volatile note, the late-week rebound shows the recent correction may be behind us. That's why I believe prices will keep running higher from here thanks to several strong fundamental and technical factors.
Here are my short-term and long-term silver price predictions...
Price of Silver Could Rally to These 2 Targets in 2017
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Looking to last Tuesday's bottom of $16.06, silver had lost 13.2% from its April 17 peak of $18.51. As this chart shows, that's a significant pullback in less than one month...
The chart also shows the RSI (top line) and MACD (bottom line) momentum indicators. With the RSI falling below 30 and MACD bottoming last week, they could provide support for some sort of relief rally in silver prices.
Looking at silver mining stocks - which are gauged by the Global X Silver Miners ETF (NYSE Arca: SIL) - they are up about 7.8% since Tuesday. This has been leading the metal higher.
With that in mind, I think the silver price could rally about 4.7% from today's price to $17.55 before hitting the resistance of that 50-day moving average level.
The gold/silver ratio also looks like it has hit an interim peak, which could easily fall back to 72 from its current 75 as silver catches up on gold...
Looking further out, there's bullish news for silver...
The latest report by the Silver Institute said global silver mine production fell in 2016, the first time since 2002. The reason is due to lower lead, zinc, and gold production, of which silver is often a byproduct.
The Silver Institute also said in this year's World Silver Survey that the supply of scrap silver was at its lowest since 1996, causing the overall silver supply to drop by 32.6 million ounces last year. According to the study, the solar sector has pushed its silver demand up 34%, the largest since 2010.
Near term, I expect silver's current rebound to continue. Beyond that, I still expect considerable strength in the last leg of 2017, pushing silver up to $22. That would be a strong 31.2% gain from the current price of $16.77.
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