Why the Silver Will Climb Higher in 2016 Despite Fed Uncertainty

Silver Investment

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Unpredictability is a buzzword today. There is a high unpredictability with the weather scenario. Weather scientists all over the globe are trying to collate information to understand the weather changes. But this uncertainty remains. Even in business, the unpredictability quotient and chaos reigns. The business in chaos is an eventuality.

The prices on silver had an element of chaos recently. The U.S. Federal Reserve has given indication of increasing the interest rates in 2016 with an attempt to stimulate growth and creating jobs. A direct correlation between the hike in interest rates and the sensitivity of metals has its impact on trading. As the metals are dominated by the dollar and are non-interest-bearing. But the trading in silver has been bullish so far. This upward movement in trading was further reinforced by the comments of Janet Yellen, Fed Chair on the weakening pace of the U.S. and global economic growth. She also stated that the FOMC (Federal Open Market Committee) had no scheduled rate hike.

As a result, the investors have started capitalising in the silver investments at a rapid pace. The long-term investors seem not to be affected by the retracement and this is supported by the flows into ETFs. The exchange-traded products (ETPs) are also at a high level. This underscores the fact that investors are interested in the safe-haven benefits of silver, undermining the Fed’s effect on the price of silver.

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