[Ed. note: this article was written in October last year, and was updated several times since then as seen in below updates]
Silver is breaking down, similar to gold and miners. That does not bode well for the price of silver in 2017. How deep could silver fall in 2017? That is the question we try to answer in this article.
Silver’s breakdown should not come as a surprise, as we warned our readers already two months ago that silver was on the verge of correcting, just weeks after the Brexit frenzy.
We do realize that we were a lonely voice, as evidenced by Bloomberg’s bullish silver article, Keith Neumeyer’s nine-bagger prediction for silver’s price, the expectation for a bullish silver price after the Brexit. The Daily Bell came out with a fundamental argumentation on why the price of silver must go higher. All that is fine, but serious investors should realize what it is: it’s media.
Media articles are not a solid basis for smart investments.
Our analysis revealed a red flag for silver when the grey metal hit this triple resistance point which is visible on its long term chart (see below). Let’s be honest: a triple resistance point is not a coincidence, and it should be taken very seriously.
Since then, silver’s 2016 rally has stalled, and, as a consequence, it resulted in a stiff correction this week. We believe this correction has more downside potential.
How low could silver fall in 2017? The answer is very simple: by examining silver’s chart, we can derive a first obvious target of $15, to be reached somewhere in the first months of 2017. In case that support area would be breached, we would say that the most bearish scenario would result in a $10 silver price.
We do not expect silver to fall as low as $10 in 2017, but don’t exclude it neither, for the same reasons outlined in our gold price 2017 forecast. The alternative bearish target would be $12, i.e. the 2007 and 2009 lows.
Short term, the $15 target is as good as a fact.
New update on our silver price forecast
*** Update on 26 December of 2016 ***
We stick to our bearish silver price forecast for the first part of 2017.
Silver’s long term chart below shows a rising trend (green lines) and the recent falling trend (purple lines). When analyzing precious metals prices it is key to identify the trend channels. We look for price points where several important trends arrive at one specific price point. Price point (1) on the chart was important as it halted silver’s rise.
The next important price point is indicated with the number (2) on the chart. There is no support between the current price and price (2). If (2) does not hold, there is little in the way until $11.50 and $9. That is a stretched scenario though, but never say never in markets. We will re-evaluate our forecast once silver is near $14.50.
*** Update end of April 2017 ***
After the rally which took silver from $15 to $19 in the first months of 2017, it seems that silver is now falling sharply again. In the second half of April, silver has fallen non-stop, and is trading again right above $16. It seems our silver price forecast for 2017 is as accurate as it can be. Our viewpoint has been that gold is leading the precious metals sector, no matter whether silver looks stronger. The point is that silver only leads once precious metals are in a strong bull or bear market, not in periods in-between.
Given that silver’s seasonality effect will kick in, as we explained on Marketwatch (MarketWatch Features InvestingHaven’s Silver Price Forecast), chances are very high that silver’s high for 2017 was set mid-April. Below chart shows how silver tends to peak in April, every year, except during the raging bull market in 2009 and 2010.
We remain firm that our bearish silver price forecast for 2017 will materialize. We also believe that will be a once-in-a-decade buy opportunity for silver.
*** Update early July 2017 ***
It is a fact: silver prices are breaking down. In this detailed analysis Silver Price Crashing. What’s Next For Silver In 2017 we explain that readers should very closely watch the $14 to $15.50 area: above there, silver is neutral to bearish, below there it is strongly bearish.
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