This Silver News Points to a 27.8% Return Before 2018

The biggest silver news story of the last week has been the metal's much-needed rebound, and that could kick off a double-digit rally to close 2017...

silver newsAccording to Money Morning Resource Specialist Peter Krauth, silver could gain another 27.8% during Q4 2017. And silver's price action over the last week is a sign the rally is just about to begin.

Although silver prices were largely flat last week, they shot up 0.9% to a one-week high of $16.79 on Friday, Oct. 6. This gave the metal a weekly gain of 0.6% - its first weekly gain in a month.

Investors have been embracing silver despite the dollar getting stronger. That's because the dollar's rally appears to be ending after the currency fell back below an important level...

After bottoming at a two-and-a-half-year low of 91.35 on Sept. 8, the U.S. Dollar Index (DXY) - which measures the dollar against currencies like the euro and the pound - has rallied back to 93.25. It even touched the 94 level for the first time since July.

Since silver is priced in the dollar, a rising dollar tends to lead to lower silver prices. That's because any rise in the dollar makes silver more expensive for users of other currencies, which lowers the demand for silver, which lowers its price.

But the dollar's climb from 93.08 to 93.80 last week, combined with silver's 0.7% gain, indicates silver investors don't expect the dollar's strength to last much longer.

This is why Peter - a 20-year veteran of the silver market - thinks the price of silver will run much higher before 2018...

The DXY couldn't maintain above the 94 level last Thursday, indicating that may be a resistance level that could cap the dollar's gains the rest of the year.

"After poking above the 94 level, the DXY has pulled back below 93.80," Peter said. "I believe that, after the dollar's gains of the last month, it could now flatten."

Today, we're going to show you Peter's bold silver price targets for Q4 2017, one of which indicates a 27.8% gain before the end of the year.

First, let's take a closer look at silver's important rebound last week...

Here's the Silver News That Boosted Prices 0.6% Last Week

After settling at $16.68 on Friday, Sept. 29, silver prices opened lower near $16.60 on Monday, Oct. 2. The metal traded in the narrow $16.60-$16.65 range for most of the session, eventually settling at $16.65 for a small 0.2% loss.

Tuesday was uneventful, as both silver and the dollar traded mostly flat the entire session. As the DXY barely moved from 93.56 to 93.57 on Tuesday, the silver price saw no gain either, closing the day at $16.65.

On Wednesday, Oct. 4, silver fell despite the DXY also trending lower throughout the day. After reaching a high of $16.84 in morning trading, silver prices declined from there as the dollar dropped from 93.57 to 93.46. The metal settled the day 0.2% lower at $16.62.

This chart shows the DXY's performance since Wednesday, Oct. 4...

silver price

Silver showed more resilience in the face of a rallying dollar on Thursday. The DXY climbed to 93.96 by that session's close, touching a more than two-month high of 94 during intraday trading. Still, the price of silver managed to settle at $16.64 for a small gain of 0.1%.

This was a major sign of bullishness for silver prices that's led to consistent gains since then...

The metal shot higher on Friday, Oct. 6, as the DXY declined from 93.96 to 93.80. After opening flat at $16.64, prices briefly cratered to $16.34 around 10 a.m. before surging back toward $16.80. They eventually closed at $16.79, marking a 0.9% gain for the day and 0.6% rise for the week.

Urgent: Executive Editor Bill Patalon just saw something on his precious metals charts he's only seen twice in 20 years. He calls it the "Halley's Comet of investing" - and it could lead to windfall profits. Read more...

The silver price's rebound has continued into this week as the dollar retreats from the 94 level. Yesterday (Monday, Oct. 9), silver opened sharply higher at $16.95 and steadied at that level for most of the session. Prices closed at $16.97 for a gain of 1.1%, while the DXY fell from 93.80 to 93.72.

And the silver price today (Tuesday, Oct. 10) is on track for its highest close since Sept. 20. The metal is currently up 1.4% and trading at $17.22.

As Peter told Money Morning Members in this week's gold update, the 94 level appears to be the ceiling for the DXY right now. In other words, its inability to stay above that level since touching it last Thursday means the dollar's rally is likely coming to an end.

But the dollar isn't the only silver price factor we're looking at.

One burgeoning industry - whose total revenue grew 20.8% during the first half of 2017 - is expected to boost silver demand in 2018.

That will inevitably lift prices higher...

Why the Silver Price Could Surge 27.8% Before 2018

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According to Peter's most recent research, the price of silver could climb to $18.50 this fall and $22 by the end of the year. Given the current $17.22 silver price, those targets would represent gains of 7.4% and 27.8%, respectively.

In Q4, the primary driver for silver will continue to be the dollar, but we're also seeing the demand for silver rising in 2018 too, and that's helping boost prices...

After the DXY touched the 94 level last Thursday, it's since fallen back down to 93.25. This is a strong indication that the DXY won't be able to hold above 94 this year.

If the DXY can't break out above that level, its stagnating gains would lead the way higher for the price of silver.

"It seems the DXY is encountering overhead resistance near that 94 level," Peter noted. "With that serving as the resistance level, the dollar could well consolidate near 94 for a while."

Besides the dollar's weakness, we're also looking at how sources of rising silver demand could lift prices even further in 2018. One of the biggest sources of this rising silver demand will be growing semiconductor production.

Silver has become a critical component of semiconductors. These are chips that serve as the main power source for all cell phones, computers, and other electronic devices around the world. Silver is used during the plating process, which is when a thin layer of the metal is coated onto the semiconductor to give it an electric charge.

Rising semiconductor sales will boost demand for its most important metallic ingredient. In the first half of 2017, global semiconductor revenue jumped 20.8% from the year before to a whopping $190.5 billion, according to the Semiconductor Industry Association.

An important factor behind this growth is artificial intelligence (AI), which is one of the biggest sources of semiconductor demand besides data centers and self-driving cars. AI startups saw about $2.1 billion in funding in the first four months of 2017. At that rate, they could see $6.3 billion by the end of the year - a 75% increase from 2016's total.

The Bottom Line: Silver's 0.6% gain last week - combined with the DXY's inability to stay above the 94 level - support our prediction that silver prices could reach $22 by the end of the year. While the dollar will likely be the biggest influence the rest of the year, rising semiconductor demand will play a role in the silver price's continued rally in 2018. The metal's important role in the plating process means silver's demand will inevitably rise alongside semiconductor demand.

Up Next: Money Morning Executive Editor Bill Patalon just caught something on his gold charts that he's only seen twice in the past 20 years. A $13 billion gold anomaly he calls the "Halley's Comet of investing." It's very rare, and fleeting, and Bill sees things lining up perfectly to bring some very sizeable precious metal profits to well-positioned investors. Click here to check out his research...

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