Silver Prices May Rise with Infrastructure Projects
The president of the United Auto Workers said he will sit down and talk with President-Elect Trump to try and crush the North American Free Trade Agreement, describing NAFTA was “a problem.” The union of auto workers is an early advocate for working with Trump to change trade agreements seen as being detrimental to American workers. Other industry organizations are likely to ally themselves with the future president, who made trade a cornerstone of his campaign promise to “Make America Great Again.”
Investors are anticipating Trump’s agenda to help stimulate the economy with infrastructure projects that will drive up commodity and raw material prices. As a result, industrial metals like copper are seeing a spike in price. In London, copper has jumped more than a $1,000 per ton to over $6,000, its biggest weekly gain since 1979. Used extensively throughout the energy sector and in electrical component and switches, copper prices will impact a wide range of cost increases from electrical switches to housing construction.
Expected to follow a similar trend is silver, a precious metal with numerous industrial uses. Daryl Guppy, CEO of Guppytraders, said he sees silver following a similar path to copper, with both an industrial upside and potential for greater returns than gold. “Silver lags the gold price behavior,” he said. “Silver has a resistance level near $18.75. This is the equivalent to the $1,290 resistance level on the gold chart. Silver lags gold, so the silver price is only just moving above resistance near $18.75.”
“Silver is the trade because it has much more leverage. It is coming from a lower price,” he told CNBC. Guppy believes if silver can break through $18.75 per ounce it could move towards a longer upside target of $26.00 per ounce, a potential gain of more than 36% from current levels.
New negotiated trade deals and infrastructure projects could prove to be a positive for future silver prices. Precious metals like silver benefit from potential upsides during economic downturns and inflation as a safe way to preserve wealth. Silver also benefits during economic booms when industrial demand is high. With interest rates likely to remain ultra-low for the foreseeable future, now may be a great time to buy silver and make one of the most versatile metals part of your investment portfolio.
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