The Price of Silver Explodes

BGASC Metals
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Posted: Jul 07, 2016 12:01 AM
The Price of Silver Explodes

Silver Rises From $17.75 – $20.31 an Ounce in One Week

Silver’s Rise of $2.50 an Ounce Equates to 14.4% Increase in One Week

Prior to the Brexit vote on Thursday June 23, 2016, the price of silver had been rising steadily throughout 2016. At the beginning of January 2016, the price of silver was about $13.81 an ounce. By the day of the Brexit vote, silver had risen to about $17.30 an ounce for an increase of over 25% year to date. When the price increase from the day of the Brexit vote through last night’s close of $20.31 an ounce is included, the price of silver has risen about 47% year to date through July 4, 2016.

In British pounds the increase has been more dramatic. Since January 2016, silver has risen nearly 65% against the British pound through July 4, 2016.

Silver’s Price is Historically Volatile

In recent years since silver hit its high of about $50 an ounce in April 2011, the price silver had been on a steady decline through the end 2015. Indeed, even though the price of silver soared from January to April 2011, the price of silver actually declined about 10% in 2011.

While price increases of 40% don’t happen often, they have occurred silver bull markets. Over the past twenty years, silver has fallen nearly as many years as it has risen. When silver falls it falls hard. When it rises its gains tend to be spectacular. For example, silver rose 83% in 2010. Silver rose 375% in 1979 but fell 44% and 49% in 1980 and 1981, respectively.

Massive price increases in silver have inevitably been followed by massive declines. The last time silver rose consistently was during the period of 2002-2011. During that period silver rose every year between 15-83% annually from 2003-2007. In 2008, silver was rising too. When the financial crisis hit later in 2008, however, the price of silver dropped and ended the year down about 25%. Silver then rose approximately 50% in 2009 and 83% in 2010 before peaking in 2011. Silver then dropped from $50 an ounce in April 2011 to under $14 an ounce end of 2015, nearly a 75% drop.

The price of silver is up over 40% this year.

 

Whether silver’s recent rise is the beginning of a spectacular multi-year bull run or destined to flame out, no one can say. Those that buy silver for the long term often engage in a practice called dollar cost averaging; i.e. buying modest amounts of silver at regular intervals in order to protect against mistakes in market timing that may result in buying too much at high prices and not having enough resources to buy at lower price. While no investment is entirely safe or any investment strategy fool proof, dollar cost averaging can reduce some of the risk caused by wild swings in the price of silver.

The foregoing information regarding the price of silver and dollar cost averaging is provided for informational purposes and is not, and should not be regarded as, investment advice or as a recommendation regarding any particular course of action. Prior price action of silver on the up and downside may not be indicative of further silver price action. The historical prices of silver are retrieved from third party sources deemed to be accurate. BGASC makes no representation, however, as to the accuracy of such information and assumes no responsibility to correct or update any information provided above and assumes no responsibility for reliance on such information.

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