Expectations for Silver in 2017

The Market Gage - Dillon Gage's Precious Metals Newsletter

What do we expect to see in the silver market in 2017? As you know there are so many factors that have an impact on all precious metal prices including the Dollar, U.S. Treasury Yields and developments over the pond. Today I will discuss a few of these factors and offer a timeline and price range for when I believe the silver market will heat up and cool down. This analysis is totally based on a number of factors I expect to take place this year which should drive the value of silver higher and lower throughout 2017.

Let me first list some of the indicators that The Wall Street Gold and Silver traders will be watching as well as some Wall Street economists and analysts.

Based on the last Fed meeting in December the Fed governors have expressed they expect 3 rate hikes in 2017. I disagree and here is one of the reasons why. The CME Market Watch Tool is published every day predicting the odds by the Street, or market participants as they like to be called, indicating the following odds of rate hike at each Fed meeting in 2017 and they are:

  • Feb chance of a rate only 3 percent
  • Mar 23.8 percent
  • May 33.8 percent
  • Jun 46.3 percent
  • Jul 44 percent
  • Sep 38.5 percent
  • Nov 34.4 percent
  • Dec 24.2 percent

As you can see in any month the chance of a rate hike is no higher than 46.3 percent. Looking at these numbers one would think that any rate hike would be in question and solely dependent on positive economic data.

Ok, next let’s look at the first 100 days of the Trump administration. Many Democrats as well as some Republicans are questioning President elect Trump’s plans for spending on infrastructure and at the same time his plans for cutting corporate and individual tax rates. Where will this take our country’s debt as AGAIN this is not being addressed as it should be.

As we have seen over the last couple of days the Democrats on the Hill are digging in their heels to do whatever it takes to derail any agenda President Elect Trump puts on the table.

As I indicated in one of my recent comments, I expect someone or some country around the Globe will test his resolve and what he is made of that as soon as the President elect is sworn in.

Next, let’s look across the pond.

The British Prime Minister May had this to say about the EU recently, “We are leaving, we are coming out, we are not going to be a member of the EU any longer. We will have control of our borders, control of our laws, but we still want the best possible deal for UK companies to trade with and operate within the European Union and also European companies to trade and operate with in the UK.”

Meanwhile, the French National front leader Marine Le Pen said if elected she will put forth a movement to have France also exit the EU. Currently she is considered an outsider to win the election on April 23rd; but if she can get foreign bank financing for her campaign she claims her anti–immigrant exit the EU platform can get some traction.

The Chancellor of Germany Angela Merkel has been under extreme criticism for her decision to open the boarders of the masses of immigrants. Back in September 2016 at the German State elections her party look a blow in the election results which she agreed this was total he fault because of her decision to open the borders.

The reason I emphasize the issues facing the UK, France and Germany is that for the European Union to stay intact, it cannot accept one more defecting country without experiencing a total collapse. It seems to me that only countries not threating to leave are the ones looking for a bail out. These are very serious concerns for the European Central Bank with Italy’s banking system hanging on a string (its most recent bailout of the world’s oldest bank Monte Dei Paschi is keeping them afloat for at least a couple more months). One must remember the majority of Italy’s bonds are held outside the country. One must also remember that being in a global economy it only takes one country to push the domino tile over to effect the world’s banking system.

I can go on with other issues like the direction of the dollar (lower) and what I expect of US Treasury yields, that can affect the price the price of Gold and Silver in 2017, but I’ll spare you a new eye exam. So here is what I expect for the price of silver in 2017.(wiping the sweat off my brow)

I have expected a slow start to the precious metal markets in 2017 as President Elect Trump’s good intentions get derailed and the equity markets lose their love affair with him. I expect our markets to pick up steam in the second quarter this year as we will see no significant U.S. growth to talk about. My real concern is Europe. This area of the world will create the catalyst for the metals to go higher in 2017 and handcuff the Federal Reserve Bank here from raising rates. I expect gold to be more exciting as I expect news out to the EU to deteriorate. Nonetheless I expect both metals to be trading higher at the end of 2017, gold having a better time of it.

Here’s something I never tried or for that matter have I seen anyone else try to predict a month by month analysis of the price of silver in 2017.

  • Jan higher
  • Feb flat to slightly lower
  • Mar flat to slightly higher
  • Apr higher
  • May higher
  • Jun higher
  • Jul lower
  • Aug lower
  • Sep flat
  • Oct higher
  • Nov higher
  • Dec flat

Trading range for silver in 2017. The low in silver for 2017 has been met already at $ 15.90 on Jan 3rd. Two scenarios to consider: If President elect Trump is successful in gaining support for his infrastructure plan (since silver can be considered an industrial metal)the high for silver in 2017 will be $ 18.50. Silver Eagle production I expect to be 42 million. Otherwise a high of $ 18.13 and a production of 38 million Silver Eagles.

One thing I KNOW I can predict. It won’t be dull.

Have a great weekend.

Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.