Silver Market Update (7-11-2015)

For the second week in a row silver slid gently, losing about half a percent of its value. Clearly that’s a disappointment for investors but in the current market climate we don’t think it’s too severe. All sectors were seriously affected last week and silver actually did better than a lot of people expected it to. We saw a very sharp fall at the beginning of the week as most markets plunged, followed by a steady regain from Wednesday. The spot price didn’t make it all the way back up but it did close at $15.62, just 6.5 cents down from the Friday before. In the circumstances that’s pretty respectable.

At the same time we saw the Dow Jones index climb slightly on Monday, then fall away before recovering in very much the same way as silver did. The Dow did end the week slightly up, mostly fueled by rumors of a deal to end the Greek debt crisis. Britain’s FTSE 100 meanwhile fell over the weekend then spent the week rising, again closing a touch above where it started. The overall picture is of markets in every sector dropping off early then managing to gain back ground as the period went on. The central fact behind most of this was, as usual, Greece. We’ve predicted an end to that crisis so often we’re very wary about doing it again but it does look like the last act is opening. Athens is almost completely out of cash and has no real choices left, so we should know this week whether they’ll stay in the Euro or not. However it’s no longer clear what that will mean. It now looks like a deal could strengthen the Euro, which would be good news for US exporters – and share prices – but bad news for silver.

At the same time the Chinese markets are also heading strongly down, and it looks like the Asian shares bubble might be bursting, so there’s a chance of increased demand for bullion from that quarter. That would put an upward pressure on silver that might compensate for a lot of the falling US demand. The general unreliability of European bonds could also fuel interest in a safe haven.
Oil definitely isn’t offering much competition to silver right now. Prices slipped noticeably last week, with WTI closing at $52.74 a barrel and Brent dropping back below the $60 mark for the first time in a while to finish at $58.73. As always this is mixed news for equities; most businesses will see costs fall and profits rise, but it tightens the screw on the US oil industry as the price falls even closer to – or below – production costs.
It would have been nice to see silver climbing last week, but it probably wasn’t too likely given the nervousness we saw in other markets – especially equities and foreign exchange. Whatever happens with Greece it’s likely many investors will be drawn to the currency markets for a while, but when that starts to settle there’s a lot of potential for silver to start picking up value again.