Silver Market Update (5-10-2015)

Silver had another pretty good week, profiting from the falling equities markets to gain 30 cents over the previous period. There were ups and down along the way, and a dramatic spike on Thursday that saw the spot price break through $16.70 for a few hours, but on Friday it settled back to $16.395. We were waiting to see what happened last week after a fairly inconclusive end to April, and silver’s performance has left us feeling a lot more positive. The spot price is still well below where we think it should be but, for now, it seems like confidence in the metal hasn’t collapsed and there’s potential for more growth in the coming weeks.
The key driver for silver seems to have been the equities markets, re-establishing a link that seemed to have faded the week before. The Dow Jones industrial average began the week on a sharp downward trend, and that looks to have pushed silver upwards. The Dow started to rise again on Thursday and while silver lagged behind slightly it did respond by dropping back more than 30 cents on Friday. Most of the markets recovered on Friday, almost certainly reacting to the Conservative victory in Thursday’s UK general election; a major worry for traders was that the opposition Labour Party had looked like being able to form a government, and it would have been relentlessly hostile to the markets. The Conservatives are a lot more pro-business and most markets registered their relief at the news – in a bonus for FOREX investors the British pound jumped at the news, as did equities and gold. Silver seems to have missed out on that unless it’s reacting slowly again, in which case look for gains early in the week.
Meanwhile oil still isn’t offering much of a challenge. Prices are only a few cents higher than they were the week before, with West Texas crude a few cents below $60 and Brent a touch above $65. Oil does seem to be creeping slowly upwards but any progress is hesitant, and there’s a lot more interesting movement in precious metals. That should attract some more money to silver and nudge the spot price up.
Right now the main rival to silver, apart from shares, is foreign exchange trading. The embattled Greek government is fighting a losing battle against massive debt and could soon find itself being ejected from the Eurozone. A forced departure would be bad news for Greece but probably very good for the Euro, which is expected to rise sharply if that happens. On the other hand politicians in Brussels and Athens are determined to hold the single currency together so Greece may be able to stay in, which will probably hold the Euro close to its current low level- unless Athens defaults on its debts but manages to evade Euro exit, which would crash the currency to well below dollar parity.
It’s very hard to make any predictions about silver in the current climate but last week should have everyone feeling slightly more optimistic. With some more possible rises around the corner this is not the time to sell.