The monthly price movement of silver is not a completely random event. Some months have a much higher probability the price will increase when compared to other months. It is also true that in some monthly the price of silver is much more likely to decrease than increase. To those involved in buying and selling silver this information could be very helpful. The purpose of this short analysis is to understand the average price movement of silver.

The method of analysis used the average monthly London SPOT silver prices from 1984 to 2008. An “up month” is defined as a month where the average price is greater than the average price for the previous month. A “down month” is just the opposite, that is, the price is lower in the current month than it was the previous month. In an “up month” the price goes up and in a “down month” the average price goes down. Figure 1 illustrates this monthly price movement pattern.  In the month of January in Figure 1, the hatched bar goes to 15. What this means is that for 15 years of the 25 studied the average monthly price of silver increased from the previous December to January.  Also in January of Figure 1, the solid bar goes to 10. This indicates that in 10 of the 25 months studied, the average price of silver was less in January than it was in the previous December. What this figure tells us is that in January and February you are most likely to see the price of silver move up. June is typically a down month for price movement and so are the last four months of the year.

Figure 1 – Monthly price change in SPOT silver from 1984 to 2008. The solid bars represent months with a downward price movement. The hatched bars represent months with a upward price movement.

Figure 2 shows the number of months were the yearly average high and low occurred. Since this analysis used the monthly averages you can not assume that the yearly daily high occurred in the same month as the yearly monthly average. The same thing goes for the monthly and daily low. What we can see from this graph that the yearly low is most likely to occur in December and February is a good bet on being the month with the yearly average high. Another point obvious from the graph is that no monthly average high or low occurred during the month of August.

Figure 2 – Months that contain the yearly high or low. The solid bars indicate months where the early low (monthly average) occurred. The hatch bars represent months where the yearly high (monthly average) occurred.

In conclusion, the first quarter of the year is typically bullish (the price goes up) for the price of silver with a correction in mid-summer. The low point of the year for the price of silver most often occurs in December. Each year is different so this analysis is only helpful in a general sense.

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