Silver Market Update (3-14-2015)

Following a very disappointing performance the first week in March silver continued to slide for the first half of last week, but bounced on Wednesday. Its recovery over the next two days wasn’t enough to bring it back to its opening price and it closed the week at $15.64. That’s still 28 cents down on the previous period, although well up from the week’s low of $15.30. In the current climate it’s hard to predict what this week will bring, but the fact silver ended the last period heading up could suggest it’s reached a level where solid support exists. If so then, with a bit of luck, this week will see it recover some value.
Unusually for a week when precious metals fell, the main equities markets were down too. This continues another trend from last week but the shape of things is becoming slightly clearer now. The Dow Jones and the UK’s FTSE 100 both slipped back, but the continental European indexes – especially Germany’s DAX and the French CAC 40 – actually managed to gain slightly. It’s likely this is down to predictions about near-future export performance and the effect it will have on company performance. Currently the Euro is at a twelve year low against the dollar, trading below $1.05 against close to $1.40 this time last year. That’s going to be a big boost for Eurozone exporters like Germany and France, but for US companies trying to sell to the huge European market it’s bad news. The dollar’s relative strength could be a short-term issue but a lot of that depends on what happens with Greece. If the country is ejected from the Euro the single currency is likely to weaken further for a few days then rebound strongly, making US exporters more competitive again, but if the ECB keeps struggling for a compromise deal with Athens the Euro will probably stay down.
Obviously all this volatility in exchange rates makes for an attractive option for investors who don’t mind taking a risk, and the effects seem to have struck the oil market as well as the silver spot price. Both Brent crude and WTI are down about $5 a barrel over the week before, at $54 and $44 respectively. That indicates a weak outlook for commodities as a whole but silver does seem to be holding up better than oil is.
So once again investors are looking at a highly uncertain future and it’s difficult to predict what will happen next. This week is likely to send important signals and will be keenly watched; if silver seems to have hit firm support, and rebounds, that’s likely to draw in a lot of money from buyers hoping for a quick profit. On the other hand if it falls again many investors will be tempted to sell off their holdings to avoid further losses. The result of that could be a renewed loss of confidence and a price that stays low in the medium term. Of course that’s good news for those looking for a long-term investment – the perfect chance to build up large stocks cheaply – but less welcome for everyone else.