It’s been a lackluster few weeks for silver prices.
Over the last month, the precious metal has traded between $14.20 and $14.80, with an average price of $14.65.
However, it looks like there’s a significant breakout on the way, which could mean tremendous profits for savvy silver investors.
You see, market instability, rising bond yields, and a volatile dollar are putting pressure on the gold-to-silver ratio – and pushing silver prices up in the process.
As market instability pushes investors toward “risk-on” equities, silver prices are likely to take off…
Silver Prices Are on the Verge of Breaking Out
Silver and the dollar have traded in lock step over the last week.
On Tuesday (Oct. 16), the U.S. Dollar Index (DXY) fell as stocks bounced back from this month’s early sell-off.
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Silver fell in turn as investors pulled money out of precious metals, which are often used to hedge losses during a sell-off.
However, as markets peaked on Wednesday (Oct. 17), the DXY began to rally with silver following close behind.
You can see the dollar’s rally in the chart below…
The DXY rallied from 94.8 on Tuesday (Oct. 16) to a high of 96.08 on Friday (Oct. 19).
Unfortunately, the dollar’s aggressive rally ended up suppressing silver prices as the week wore on.
Silver dropped to about $14.50 early on Thursday, then recuperated to a high around $14.68 on Friday before closing at $14.60.
On Monday (Oct. 23), growing geopolitical tensions across the globe pushed the dollar up further, driving silver prices to a low of $14.50.
While these declines are sharp, they’ve created a great buying opportunity for silver – one you shouldn’t miss according to my latest silver price prediction…
The Dollar’s Strength Will Be Silver’s Gain
Recent geopolitical turmoil has weakened markets, driving up bond yields and lending support to the dollar, which has consolidated around the 93.5 range.
However, we know U.S. President Donald Trump is in favor of a weaker dollar, and my sense is once the midterm elections have faded, the dollar may take a significant hit.
While it remains to be seen if the DXY’s 96 level will continue to act as overhead resistance, it looks like the DXY will continue to consolidate near its current level.
And with silver prices trending in tandem with the DXY at the moment, the dollar’s consolidation is a bullish signal for the precious metal.
And although silver stocks have basically gone sideways since mid-August, the relative strength index and moving average convergence divergence momentum indicators have clearly been trending higher.
This is evident in the chart below:
Meanwhile, the gold-to-silver ratio remains historically very high:
An elevated gold-to-silver ratio is often a bullish trend for silver.
Although silver rose above its 50-day moving average, ideally it needs to close above $15 to get buyers excited, then above around $15.65 in order to power another leg higher.
With an increasingly unstable global economic landscape pushing investors toward hedging tools like silver, this is the perfect time to get in on the precious metal before it takes off.
And while silver is a great way to protect your investments from financial turmoil, there are even better methods available to savvy investors…
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