Welcome to illuminati silver, we tell you
the truth about silver. Today is Monday 19th September 2016 and we
are providing our views on the future direction of silver prices for the remainder of the
year. In Part 1 we highlighted the main industrial uses of silver and how we felt that prices
would be capped to around $22 or just below if entirely based on Industrial demand.
We also pointed out that interest rates and the value of the dollar also has a significant
effect and to a large extent has affected demand in recent months.
Today we are going to cover in more detail how psychology and particularly the psychology
of fear and uncertainty could have a more profound effect on prices this year.
1. Uncertainty of the Banking Sector: The Banking sector is in turmoil and particularly
European banks. Partly because of the uncertainty created by Brexit but mainly by the fact that
there is no doubt Europe is over-banked. The latest and most serious fear is that of Deutsche
Bank. In the last quarter alone it announced losses of $6.6 bn and that it was going to
shed 9,000 permanent staff almost immediately and a total of 35,000 would go over the next
2 years. It’s departing some 10 countries and has cut its dividend until at least 2018.
Its shares naturally have been down as much as 45% this year and In a report in June,
the IMF said that “Deutsche Bank appears to be the most important net contributor to systemic
risks in the global banking system, followed by HSBC and Credit Suisse”. Should any of
these banks fail outright, the knock on effect would prove considerable, adversely affecting
stock markets globally and pushing up the price of gold and silver.
2. The US Elections: Prior to US Labor day, Hilary Clinton was
leading considerably in the Polls. Since then, the margin has squeezed with both candidates
literally being in serious contention for the White House. Whilst Clinton is still marginal
favourite; the email scandal, her health and of course the head to head debates all still
have to play out. Clinton will be seen as more of the same, and whilst critics may say
this isn’t good for America, it will at least be seen as a degree of continuity extending
the Obama regime and therefore is not likely to spook markets. Should Trump win however,
this business and political maverick, of whom few can genuinely place any real control or
serious prediction, a degree of economic chaos, primarily due to uncertainty will occur. Of
course long term this may play out beneficially or detrimentally for the US but nevertheless
short-term will, in our opinion, cause the price of gold and silver to rise significantly.
The elections are scheduled for Tuesday 8th November and in the run up to that time, if
the polls are even closer or Trump is leading, we shall see some truly gyrating markets.
Traditionally precious metal prices dip prior to elections and then rise immediately afterwards,
we can foresee a rise before if Trump leads and then a fall if Clinton wins and vice versa. 3. Fear of an Interest rate rise
The FOMC meets later this week and will give its announcement on interest rates. It has
already indicated that it wishes to raise rates twice this year (having reduced that
figure from 4 times originally announced at the start of 2016). We have always said, that
we can see just one rise of 0.25% and that its likely to occur at the end of the year.
In fact we believe it will be December, as it was last year. Relatively weak job data
announced this month and other Central Banks continuing with their zero rate or negative
interest rate policies, will make it extraordinarily difficult for the FED to justify raising rates.
However the possibility is sufficient psychology to curb the rise in gold and silver prices
by preventing investors to take that leap into the precious metals market. That said,
we are already seeing considerable ETF purchases and funds moving into this arena. Most major
banks have raised their gold and silver price forecasts for the year compared to previous
ones and we have no doubt that as long as the FED holds back, there will be some buoyancy
in the silver price. We mentioned in part 1 that only those with
a working crystal ball can truly and accurately forecast with certainty silver prices for
the remainder of the year. However, our analytics which proved quite accurate last year and
this year until BREXIT occurred suggests an interesting price movement for silver.
The Economy Forecast Agency which you can follow at longforecast.com predicts a high
silver price this year of $21.64 which is forecast for October and a low of $18.59 which
it predicts for September. It does however see silver moving as high as $24.49 by May
next year with the 2017 lows not falling below $20.46.
We are a little more bullish, which no doubt will surprise many. If this was not an election
year we would claim that silver has already topped out at just under $21. However, we
are in an election year with two relatively unpopular candidates, one representing the
establishment and the other being a maverick. Providing polls tighten and Trump begins to
dominate we can actually see silver prices pushing above $22 and if the FED fails to
raise rates and or a significant bank fails we can actually foresee $25 silver. If Trump
however flounders, and there is no bank collapse and the FED does raise rates even by 0.25%
then $21.80 will be our peak for this year. On the downside, we cannot realistically see
silver falling below $18. Yes if the FED raises rates now and then again in November then
$16 – $17 silver is likely, but we do not see that happening. If you thought the first
6 months were exciting we believe it will be nothing compared to the next 3 months.
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updates and offers. Our Facebook page which is updated daily can be found at facebook.com/illuminatisilver Disclaimer: Illuminati Silver owners come from a background
of Banking, International Wealth Management and Economics. Having now retired from these
worlds we are not qualified to give investment advice. Therefore, this and other productions
must not be deemed to be giving such advice and merely represent the personal views of