There's been growing excitement in the stock market lately. The S&P 500 has been back to hitting record highs, and speculation appears to be high as well, with retail investors loading up on all types of stocks, even risky ones. There has also been a rise in the price of silver.
A month ago, the precious metal was trading at around $67. Recently, however, it climbed back to over $80 -- a gain of around 20%. On Tuesday, it had dipped from those lows but was still around $79. Could this recent wave of bullishness in the stock market as a whole lead to silver taking off once again, and could it be heading to $100?
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Why silver could be in high demand as the year goes on
There's been a rising interest in silver of late, suggesting that investors are once again seeing it as a valuable option for diversifying their portfolios. Late last year, when investors appeared to be concerned with high stock valuations, that's when silver really took off. It would continue its rally until January of this year before crashing back down.
Now, however, with the S&P 500 once again doing well and stocks on the rise, there may be another rally upcoming for silver to watch out for. The market can be unpredictable at times, and while investors are bullish on stocks today, that could change in a few weeks or a month. Inflated valuations could once again prompt investors to pile into silver as a hedge, driving the iShares Silver Trust (SLV 3.88%) higher, which tracks the price of silver.
NYSEMKT: SLV
Key Data Points
Volatility in silver is likely to continue
Silver has been a volatile investment over the past year, and it has shown it can experience sudden swings in value. What may have the greatest impact on silver is what happens with the Fed chair position. When President Donald Trump announced Kevin Warsh as his choice to take over for Jerome Powell back in January, silver crashed, as investors seemed to think they no longer needed to load up on the precious metal in light of the Fed's seeming stability, but if the transition isn't a smooth one and question marks arise, then silver could once again rise in popularity as a safe-haven investment.
Given how unpredictable things have been over the past year, not only with the Fed but also with global conflicts on the rise, I wouldn't be surprised to see continued volatility and silver rise in value yet again. That doesn't, however, mean it's a guarantee to reach $100 again. Whether you're buying silver or investing in the iShares Silver Trust, you'll need to brace for the possibility of wild swings. If you're not comfortable with that, then you may be better off watching from the sidelines.
