Silver Market Update (11-17-2014)

After the previous week’s continued slide we were pretty sure silver had lost investor confidence for the moment and was likely to keep heading down, and most of last week’s reports seemed to confirm that assessment. Things changed dramatically on Friday though, with silver taking off as soon as trading started in the US exchanges. From around $15.35 it climbed through the day to close at $16.32. That’s an increase of 49 cents through the week, or a touch over 3 percent, which doesn’t come close to repairing the previous two weeks’ damage but it’s definitely a step in the right direction.
Silver’s sudden jump coincided with a similar rise for gold, and the most likely cause is the day’s activity in the equities markets. The Dow Jones finished slightly up on the week, but it did slide back a bit on Friday morning before rallying again. The dip wasn’t enough on its own to explain silver’s recovery but it came at the end of a lackluster week for stocks, and it’s probable that investors looked at the overall results and decided to look for something different. Shares are rising pretty steadily right now but there’s nothing spectacular about their performance, and plenty of underlying concerns still exist about just how strong the economy is. At the same time silver is so cheap that even with the way it’s been falling recently it can’t help looking like a bargain. A lot of analysts are wondering where equities will head over the next few weeks, and while good retail figures for Black Friday will boost hopes of a healthy holiday season it’s not clear right now. Short term, commodities have a lot to offer.
Not all commodities, of course. The long fracking-powered slide in oil prices continues despite the best efforts of Iraq’s ISIS militants and the threat of further sanctions against Russia. This week saw crude fall below $76 a barrel and Brent slipped even more sharply, ending the period at $77.74. There’s no sign of a recovery in prices here, which is good news for the economy as a whole and also good news for precious metals.
Of course silver has been sliding for a while and has blown right through several layers of expected support, so confidence is low right now, but a spike like Friday’s will start to convince traders that clever purchases have the potential for short-term gains. In turn that could start to rebuild the metal’s reputation in broader terms and there’s now a real chance it could turn the corner. We’re not making any firm predictions on that score right now, because a few good hours doesn’t make a reversal, but if it can hold on to its gains in the coming week we’ll definitely be paying close attention. It’s too early to say buy, but at the same time selling at the current price isn’t a sensible option for most people who have stocks. Hang on to whatever you have and be ready to buy more if an upwards trend starts to develop here.