What to Watch When You Are Watching Silver Prices

What to Watch When You Are Watching Silver Prices

For value investors interested in hard assets, there may be no better product available right now than silver. It’s comparatively cheap and has been for several years. It has a big upside, low downside, and the only major disadvantage is time. The big question is, when will prices start to climb?

The answer to that question isn’t a simple one. There are many leading indicators for silver prices.

Gold Prices

Gold prices are the number one leading indicator for its cheaper cousin. Where gold goes, silver follows, though silver moves at a faster rate. There’s more room for growth in the white metal as it’s presently undervalued, but that volatility can also backfire when gold starts to move downward. Nevertheless, gold is always the one to move first.

Silver Prices vs. the Euro

Just as precious metals tend to go in the opposite direction of the U.S. dollar, silver prices also seem to follow the strength of the Euro. This may be correlated to the story behind precious emtals prices and their relationship to the dollar. As the greenback weakens, investors start looking for alternative safe havens, including the Euro.

Commitment of Traders Report

The Commitment of Traders Report (or CoT) will tell you the futures position of the world’s largest traders. There are CoT Reports for all major commodities. Look at the extreme levels in the charts – the closer they are to zero, the deeper the bottom. The larger the extremes, the lower the downside predicted by major silver traders.

The world’s largest traders include the JPMorgan’s COMEX depository and ETF iShares (whose Authorized Participants include some of the world’s largest banks and financial institutions).

Price of Other Metals

While about a third of the world’s silver production comes from miners that primarily produce the metal (and therefore struggle to mine profitably when prices are low), the rest is actually a by-product of mining for other metals such as zinc, copper, and lead.

The higher zinc, copper, and lead prices go, the more active these miners become, and the higher their silver production becomes. Since these miners depend primarily on other metals, they can wind up inflating silver production even at a time when prices are low. Silver production is not a leading indicator of prices, but a major surplus means that industrial demand will have less of an impact on prices, while a supply deficit will push prices upward.

Where to Buy Silver

Find out where to get low prices on silver bars and coins before you start investing. Lower premiums on silver bars and coins will help you successfully invest. Below are some of the ways you can save money when you buy silver bullion products:

  • Buy stacks of 1 oz. silver bars or coins, as large purchases usually receive a discount.
  • Buy higher weights of bars.
  • Buy silver online to save on premiums.

With silver prices low for the past several, the time to buy is now. If you’re looking for a hard asset and safe haven for your money, silver is more accessible than gold and has higher upside potential.

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