Silver Market Update (5-24-2015)

After the excitement of a huge jump the week before, silver fell back again last week. The spot price began to slide as soon as trading began on Monday, rapidly shedding the gains it had made over the weekend and starting to eat into the previous period’s increase as well. The decline slowed by midweek, however, and Thursday actually saw a slight rise. It dipped again on Friday to close the week at $17.075. That’s 42 cents down on the previous Friday – but, taking an optimistic view, still well above where it was the first week in May. The price also looks to have stabilized so there’s every chance it will rise again next week. That obviously depends on other market sectors but the activity there isn’t necessarily looking bad for silver, either.
The main driver for commodities is the equities market, and that was quite healthy last week. The Dow Jones rose for the early part of the period, coinciding with silver’s sharpest fall, before falling back as the metal recovered. The FTSE 100 was more consistent, rising steadily all through the week. It’s likely that stocks will remain volatile for the immediate future as US exporters worry about the Euro situation. The single currency’s ongoing weakness is a big worry, forcing up the cost of US goods across the world’s largest potential market, and it’s unlikely to recover as long as the crippled Greek economy is tied to it. Many in Europe, especially in Germany, would like to cut Athens loose to sink or swim on its own but EU politicians have made clear that saving the Euro is a political issue not an economic one. That means they’re likely to accept a weak exchange rate to keep Greece in, and long-term that’s going to hit US companies and have a chilling effect on share prices.
Anyone prompted to look at commodities when equities dip is rapidly going to find that, right now, precious metals are their best option. Oil prices remain extremely sluggish, with last week’s performance hardly changing from the week before. West Texas crude is still just below $60, at $59.72, while Brent sits slightly higher at $65.37. With so little movement there isn’t much to attract investors and silver offers a lot more potential for short-term profits. Oil may turn out well in the longer term but for the moment it isn’t very exciting.
Looking at last week overall our confidence in silver isn’t dented. Yes, it dipped, but it’s still well above where it was two weeks ago and the price ended the week looking quite secure. It’s likely some support is building around the $17 level and we don’t see any reason for it to fall back under that. Meanwhile another indifferent week for share prices could see a lot of money looking for a way out, especially among exporters and in the nervous European markets. If you’re holding silver we’d suggest you hang on to it for the moment, because it’s likely to go higher by the end of the summer – and if you’re not holding any, it’s still very cheap.