Silver Market Update (4-20-2015)

After looking like a recovery might be getting into gear in late March silver’s performance has turned disappointing again, and last week continued that trend. It certainly could have been worse, but we had been hoping for better. A spot price that had stayed intact over the weekend dropped away steeply on Monday then bounced around the $16 mark for most of the week. Friday saw it finally break loose and rise again but it topped out at $16.265, almost 22 cents down on its previous close. As a single week that’s not much of a fall but considering it had looked like rising safely clear of $17 not that long ago it certainly isn’t encouraging. However it did end the period on an upward trend and if it can maintain that this week things might start to look more optimistic. It could certainly do with it; silver has been looking pretty battered for a while now and there’s no real reason for that to be the case.
Share watchers are used to precious metals falling when the Dow Jones rises, and while gold wandered away from that rule last week silver was more predictable. The Dow rose steadily from Monday through Thursday, and looked like having a good week. Meanwhile silver was either falling or stagnant – but, Friday, the Dow suddenly nosedived and silver came up on the other side of the balance. The Dow’s drop was probably down to the latest news from Europe, where the chronically low Euro is hurting US exports to the region. Unfortunately the single currency isn’t likely to regain strength as long as the Greek debt crisis continues but neither Athens nor the central bank in Frankfurt seems willing to back down. Unfortunately there’s a lot of political will being directed at holding the currency union together and that’s depressing its value. If Greece broke free and started to rebuild using its own currency it would be good for Greece and good for the strength of the Euro. That, in turn, would make dollar prices more attractive to European buyers and give the Dow a boost upwards. Meanwhile though, its latest fall helped silver avoid a disastrous week, so it’s not all bad news.
It’s been a while since silver and the other precious metals have faced any competition from oil, with static crude prices offering little prospect of earnings, but that might be on the point of changing. West Texas Intermediate gained close to $5 last week to close at $55.74 while Brent crude jumped nearly $7 to $63.45. That’s the biggest oil rise this year by a long way, and is likely to have a lot of investors ready to take a gamble. That could help hold silver prices down again over the next few weeks, depending on how sustained the trend is. If oil stagnates again this week we’d expect to see a modest recovery for silver.
So overall not a great week, but there are a few rays of hope. If stocks stay soft there’s a good chance silver will start to regain some lost value; we still think the price is stuck far below where it should be.