Silver Market Update (4-13-2015)

Despite hopes for a recovery expressed by some analysts last week turned out to be another disappointing, but not disastrous, one for silver. After climbing past $17 over the weekend and peaking at $17.42 on Monday it slipped back again to a low of $16.01 on Thursday, before recovering slightly on Friday. The spot price finished the week at $16.48, 27 cents down on its previous close. Friday’s recovery indicates the market isn’t collapsing through loss of investor confidence, though, so depending on what happens in other sectors it could easily do better this week.
The most likely reason for silver’s drop last week is the situation in the equities market. The Dow Jones rose all week, and in a return to the usual pattern we saw precious metals fall in response. Both silver and gold did manage to rise on Friday while stock prices were still going up, but overall we saw the familiar pattern of investors moving away from silver when shares were looking good. That suggests that silver’s performance could be relinking to equities in way it hasn’t been for a few weeks, so any predicted fall in shares could highlight potential gains for metal investors. Are shares going to fall? There are reasons to believe they might. US employment figures are looking quite good but there could be trouble ahead for exporters. There’s still no sign of an end to the Eurozone’s troubles, with the single currency back around the $1.06 mark, and that makes US goods expensive in one of the world’s biggest import markets. That means reduced sales, because at the same time imports become cheaper in the USA and a lot of people are going to choose a bargain BMW over a Chevy. If anything the dollar looks set to climb over the next few weeks, and that is likely to push shares down. Not all the benefit will go to precious metals of course, because the currency market will offer some pretty exciting possibilities too, but European investors are going to be giving silver some serious attention and that’s likely to lift the price.
Once again silver is facing little competition from crude oil. Prices did ease up a fraction last week but not enough to make any difference. WTI is selling for just under $52 a barrel right now while Brent has managed a smaller climb and is currently just under $58. Neither of them is moving fast enough to excite investors and there’s nothing on the horizon to suggest that’s going to change. With Russia’s continued maneuvering in Ukraine, western governments have a strong incentive to keep prices low in the hope of bankrupting Putin.
So overall a disappointing week for silver but not an actively bad one. The price seems to be moving around inside a reasonable band rather than starting a renewed fall. It would be nice to see an upward trend starting to set in, and a prolonged slump in the Dow could do that. The market is going to take some careful watching over the next few weeks.