Silver: A Technician’s Worst Nightmare?

However, there is more to this than the technical. As shown below, the silver prices moved lower in December when there was an anticipation that the Fed will hike rates. Interestingly, the same price action happened in December last year, could this possibly be a result of the so-called “Santa Rally”?

This happened for a simple reason. With a rate increase, investors are likely to move to dollars which have a higher yield. Since the dollar and gold have a negative correlation, the price of silver leads the decline in gold with a rate hike.

As we head into 2018, I believe traders and long-term investors may consider buying silver at the current prices. I believe that global risks – especially on cryptocurrencies – may continue to rise. And, when they do, the key beneficiaries could be safe havens like gold, and silver may lead the way.

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Michael Molman 2 years ago Contributor's comment

I have been wondering which metal would provide the most upside in a down turn. Been debating between #silver and #gold.