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Silver price forecast 2016: Predictions on silver prices this year

Silver Price Forecast 2016

Comparison with other precious metals

Silver has been moving downwards for a third consecutive year. In 2015 it has fallen further 12% , to its lowest point since 2009. Together with other commodities like gold, silver continued its dropping amid poor investment sentiment and low industrial demand. Reflecting investor sentiment in early 2016 silver is expected to have a bullish correction to $14.95, but due to weak industrial demand and lower gold prices, silver price will continue to decline in the second half of 2016.

It is general knowledge that in the beginning of bull market for precious metals, gold is increasing at a faster pace than silver, but in the later part of the bull market silver is increasing much faster than gold. The main reason is that in the early bull markets these commodities are bought and traded by more serious and value oriented traders. Indeed the later part is full of speculative traders trying to earn an easy buck or two. The main reason they are interested in silver is its high leverage relative to gold and other precious metals. This was the main reason the large leap in silver prices happened in the early months of 2011 ending with a peak in May, signaling that it ended, many months before gold reached its maximum.

Taking into account that at the beginning of 2016 gold signaled a new uptrend with a 20% breakout, silver is still under-performing and it is yet to break its downtrend. That is due to the very earliest stages of this bull market. Momentum traders are still trying to make a fast buck elsewhere. For us there is a positive side to this under-performance by silver prices, as silver investments are very cheap relative to gold investments and over a yearly time-frame we can place a lot of short Up trades and constantly profit from its bull trend.

Silver Price Forecast 2016: What to expect?

On silver prices charts we have an example of this under-performance that is profitable for us, if we compare it to gold. On a yearly chart gold has risen above its fall highs in a rally that happened in early 2016. But silver is still unable to do the same. Meaning that while gold is well above its 200-day MACD, silver rose just a little above its 200-day moving average. Besides it is already moving a bit downwards because of a record commercial short positions that have built up. This under-performance and many short positions mean a lot for us, as silver is likely to reverse on any correction. Silver charts look definitely weaker than gold charts at this point, which is quite Okay in the early stages of precious commodities bullmarket. Soon enough there will happen a correction, which is imminent, and silver will move back to the support area in the $14.50 mark, which is near the upper limits of its recent pattern.

Finally, if we turn to the long-term charts it is once again obvious that silver is moving weaker relative to gold. While gold broke free from its ongoing downtrend, silver's movement was barely noticeable and it barely broke out of its downtrend. However, the future holds great promises of a positive movement, with a strong pattern already there. Once again we expect to see some impressive action and make large profit.

By Chieffinancing 25.07.2016

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