Last week was a fairly positive one for silver; there was quite a lot of movement throughout the period and it ended with the spot price significantly up. That was a pleasant surprise, because for the first couple of days it looked like being another fairly serious loss. By the end of Wednesday the price was down 10 cents at $15.85, but a strong rally on Thursday morning took it past $16.40 before it settled back in the afternoon. It closed the week at $16.09, a gain of 13.5 cents over the previous Friday. That’s not spectacular, and doesn’t make up for the preceding week’s losses, but it’s still good to see silver rising again. The main problem the metal has right now is a lingering lack of confidence and the best cure for that is the sight of the price going up.
The first couple of days of last week saw an uncertain performance by gold, but silver seemed set to plunge again. At the same time the Dow Jones was rising strongly, so it looks as though the traditional link between silver and equities was working as usual for that period. It broke down again on Thursday though, when silver climbed against a still-rising Dow. On the other hand the European stock markets were a lot more subdued, with the FTSE 100 showing a small loss over the week. Yet again the cause is Greece, where the debt crisis seems to be approaching some sort of end point. Unless Athens can come up with well over $1.5 billion by the end of the month it will be in default to the IMF, the first developed country ever to do so, and that means a likely exit from the Euro. Many analysts think that would push the Euro up sharply against the dollar, as Greece’s departure would increase the currency’s credibility, and that would be good news for struggling US exporters. However the fact is nobody knows exactly what would happen, because this is all completely new territory. There’s always the chance of contagion, with other countries following Greece out of the single currency, and a risk – although probably not a huge one – that the country’s collapse could trigger a new global crisis. That’s likely to have European investors particularly worried, so there’s a good chance silver will gain more this week.
Meanwhile the currency markets have mirrored the same confusion, with the dollar and Euro moving against each other in a fairly narrow band. That’s reduced the opportunities for short-term profit and may have brought some money back into precious metals. Oil has also been sluggish, with prices falling a few cents on the week before. West Texas Intermediate is currently selling for $59.61 a barrel, with Brent slightly higher at $63.02. There’s no sign of a significant rise in the near future, either.
So overall it was a reasonably good week for silver, with the prospect of more to come. Another couple of weeks like the last one and we could see a much more solid return of confidence to match the still-healthy futures market.