Silver Market Update (3-22-2015)

After its very weak performance in the first half of March it looked as if silver was heading back for the lows we saw towards the end of 2014, and confidence in the metal seemed to be fading just when we’d decided it was picking up again. Much to our (pleasant) surprise though last week turned that on its head and we saw an impressive rally in the spot price. That didn’t show up on Monday, as the price dipped shortly after the markets opened, but then the graph reversed its course and silver climbed strongly for the rest of the week. By close of trading on Friday it was selling at $16.77 per ounce, $1.13 up on where it finished the previous period. That’s an impressive weekly gain and all the more welcome after two successive falls.
We’ve already noted that the usual relationship between precious metal prices and equities seems to have been upset right now; normally when equities climb metals fall and vice versa, but that isn’t happening at the moment. Instead the Dow Jones climbed most of the week, dipping briefly on Monday and again on Wednesday, and finished 140 points up on the previous Friday. Meanwhile the FTSE 100 managed to rise all week. It’s probable that the US and UK markets rose thanks to the Euro managing a slight recovery against the dollar, which will help make US (and British) exports slightly more affordable in the Eurozone. At the same time the recovery was extremely modest; the Euro is currently trading around $1.08, up from $1.05 a week earlier, and there’s no hint of a major recovery in the immediate future. In fact tension between the central bank and wayward member Greece seems to be increasing again after signs of a solution being found in late February, and German patience at Greece’s evasions seems to have run out. Unless Athens is ejected from the Euro altogether – and that still looks unlikely – the single currency’s troubles are likely to continue for a while longer. That means potential windfalls for currency speculators, but for investors inside the Eurozone itself it’s worrying. That, of course, is good news for precious metals. The Euro price may be relatively high thanks to the weak exchange rate but silver looks like a safe haven compared to the risks of Euro-denominated treasury bonds.
Once again silver is facing little competition from oil. The slump in crude prices seems to have ended and right now there’s no sign of a fall back to the recent lows, but the price is struggling to rise much above where it is now. West Texas is fluctuating between $40 and $50 a barrel, with Brent stick between $50 and $60. Deft trading can make profits from movements within that band but it doesn’t offer much in the way of long-term prospects, which again is good for silver.
So overall it’s been quite a promising week for silver, with the spot price safely above where it was seven days earlier and a few reasons to look for more rises in the future. Nothing is certain in silver investing, especially not right now, but for the moment it looks like a good time to buy it while it’s cheap.