Silver Price Reaction In Late April As Stocks Soar: Permanent Or Temporary?

The most important story of the week ended up not being in precious metals at all, but rather what happened to the stock market. That’s not unusual by any means, but even those who focus on precious metals like silver have had to shift their focus this week to the economy at large to figure what might happen in the worlds of gold and silver.

The key question on this Friday morning: how will silver react even as stocks soar? Let’s take a look at silver’s recent performance and where it might be headed from here.

Silver’s Performance On The Week

Silver sunk this week—and pretty quickly. Although it started Monday around $18 per troy ounce, it has since gone to the lower $17 per troy ounce range—and when your price is lower than $20 per ounce, which means the percentages involved can be pretty troubling. Looking at April, silver actually had what promised to be a potentially stable and growing month, even pushing up to $18.50 per troy ounce and higher. Now, as we see, the month is not going out with a bang, but a whimper.

Although silver did poorly this week, we can also see from this chart courtesy of Apmex.com that silver’s trend line has been consistent since the middle of the month:

Chart courtesy of APMEX.com.

When you see that trend line from the middle of April, you see that this week’s decline in silver prices might not solely be due to the recent highs in the stock market. And that leads us to another question: if that’s not what is driving down demand for silver, then what other factors may be at play?

Looking For Help From Other Factors

Usually, the US Dollar Index is a strong indicator of where precious metals will go. But as we explored yesterday in this space, that hasn’t exactly held up as true in April. Even so, DailyFX.com notes that the price of silver may need to find some help from a factor like a weaker USD if it’s going to make any moves in May.

Although recent international headlines have indicated instability in foreign policy, those headlines haven’t exactly disappeared—and yet the stock market continues to perform well. So when looking at investor confidence in stocks as a reason for silver’s low prices in late April, we might actually have to consider some other avenues.

Putting Silver’s Price In Context

Although it’s tempting to see the late-April performance of silver as a sign that the precious metal is trending downward—and it is, at least for two weeks—we should also consider where silver has gone since the turn of the year. Silver has made solid gains since early January, even if it has temporarily lost some of those gains in a mid-March and now late-April dip. Silver’s most recent bottoms have proven not to be too steep at all. The question for silver investors at the end of this business month is simple: is this just another high-quality bottom for silver, or is the trend here to stay?