Silver Market Update (4-04-2015)

Silver closed the last full week in March looking like it could be set to climb, but unfortunately it didn’t manage to follow through on that. A sharp fall when the markets opened on Monday took it from $16.95 all the way down to $16.66 by Tuesday afternoon, and while a rally on Wednesday brought it back to where it had started it slipped again on Thursday. The market closed with the spot price sitting at $16.75, a 20 cent loss over the week before. Taking an optimistic view that’s not a lot compared to some of the falls we’ve seen over the last few months and the price doesn’t seem to be developing a downwards trend as yet; it was simply fluctuating in a familiar band. There’s no reason why it shouldn’t climb again this week.
It certainly doesn’t look like silver will be facing much competition from oil in the immediate future. Crude prices continue to look sluggish, with no real movement yet again. WTI barely scraped its way past $50 last week, closing Friday at $50.34, while Brent slid to hit just $54.95. With prices staying in such a narrow band and supply stable there’s little to attract investors in this sector, so for anyone looking at commodity deals silver is a more attractive option right now.
As for equities the picture is still looking unstable. The Dow Jones and FTSE 100 both fell over the course of last week, although the Dow did pick up slightly on Friday. Continued uncertainty over the fate of Greece is holding the Euro down – it seems firmly stuck below $1.10, contrasting sharply with its value of close to $1.40 this time last year. That’s bad news for US companies trying to export to the Eurozone, which could explain the Dow’s fall. The German markets are down too, so silver should have had a good week, but it looks like investors attracted to precious metals opted for gold last week and ignored silver. Hopefully that isn’t a sign that confidence is ebbing again; there’s no reason for it to.
The latest US nonfarm payroll figures are in and, yet again, employment figures are better than expected. That should have boosted the Dow, so the fact it still managed to lose more than 200 points over the period indicates a real downward pressure on stocks. This should be good news for silver in the short term, and we were slightly surprised to see it fall last week. A more worrying fact is that the silver-gold ratio looks to be diverging again after staying quite steady for a while. If it keeps opening out a lot of investors with a position in silver are going to be tempted to bail out and switch to gold, which won’t hurt the metal sector overall but could send silver back down below the $16 mark. There isn’t any reason for that to happen because it’s still underpriced, but the market can be fickle and a downward trend is always hard to reverse. This week could tell us a lot about which way the price is headed through spring.