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In Metal Futures by Leslie Burton at 7:51 am on May 28, 2011 - 
Silver Futures Trading | Are Economic Factors affecting the markets?
Silver had suffered massive liquidation that was perhaps overdone! $49.845 was our high of April 25th and now less than a month later, we may have potentially bottomed at $32.30 (silver futures prices as of 5/27/11 have bounced back up over 37)! While the Silver had seemed to lead the action in the marketplace earlier, it appears the Gold may be leading now. Part of the problem was the volatility in the Silver drove the exchanges to raise the Silver Margins so high. The Silver Market needs to consolidate and flatten to bring down the margins a bit before it can really take off again. The Silver Market does move frequently with the industrial metals as the growth of the economy goes hand in hand with the price action of the Silver Market. There are times also when the Silver takes on safe-haven properties.
Economic factors that may affect the Silver Market:
GDP figures – Our expectations for US economic growth come in about 3 – 3.5 %. The earthquake in Japan is still a factor slowing our growth as auto parts and manufacturing may be delayed as Japan rebuilds its country after the devastation. Initial Jobless Claims - Initial Jobless Claims fell 29,000 to 409,000 last week. You can view the economic calendar of events to see when these numbers come out. The US Dollar Index – Often pressures the tangible markets when it strengthens. We look for a weaker US Dollar to support the Silver Market. The inverse relationship is alive and well! Fund activity – The Funds have the allocations to move the market. The rallies often are determined or at least started by fund activity. Investor sentiment – The forecasters are out with newsletters and trade recommendations to spur further buying/selling in the marketplace. There are typically many factors to focus on. The sentiment of the traders is vital. Jitters in the market may support Gold more than Silver now as the Gold has maintained more of the safe-haven sentiment.
you will see that those prices have risen steadily for over three decades. but also when traders are pressured in other sectors. Pan American Silver is one of the largest Silver Mining Companies in the world. that is a reflection of the Fibonacci Retracements. Understanding the history of silver prices can truly help you to better understand silver prices today. The Chart – The Daily Chart may lead traders to “wait and see” as trader mentality is attracted to the momentum of an already trending market. The quarterly profit rose three times in quarterly profit.5 million. Though the futures of the mining companies were saved. dumped massive amounts of silver onto the markets. . they may liquidate metals contracts to suffice for extra margin required to hold other products. and the prices were quickly depressed. The metal held immense power until the late 1890s. Though it may currently be the most plentiful and affordable of the precious metals. Retracements are a necessary part of the equation. occasionally they are only a reflection of the previous move. Silver demand – The demand in the physical metals may often control the price action as traders attempt to predict the supplies and usage ratio. This steady climb is due to several different reasons. From the very first discovery of silver. using it for decorative purposes and as currency. and every bit of it still has impact on silver prices today. While we hate to see a washout in the marketplace. The margins may prohibit traders from taking the futures positions. ETF’s – The ETF’s in Silver have had plenty of movement both up and down as traders desire to be in a healthy move. when precious metals were first offered to consumers for investment purposes. but currency values surely can. trends are hinting that this will not remain the case. but prices dropped suddenly with the discovery of several major silver strikes. These silver strikes. Silver values never really change much. silver prices did not experience much growth at all. Silver miners that were thrilled with their large discoveries soon realized that their sudden success would actually be their downfall. effectively stabilizing the prices. The power of silver is so absolute that many languages actually use the same word to describe silver and money. They boasted revenue rising 40 % to $190. such as the Comstock Lode. Margin money – Margins may have gone up for Silver itself. the United States government purchased up large stores of the silver. Fast forward a bit to the 1970s. mankind has held it in high regard. Factors affecting silver prices The price of silver has a long and volatile history. After all. To spare these mining companies from destitution. but the largest of these reasons involve the state of the economy. but are reluctant to stay in during drawdowns in their investment products. but the options may be a way to garnish the benefits of the increased volatility and define a prescribed risk for the trade. If you look at the prices for silver since it was first made available to the public.
OPEC leaders met in Cairo to discuss current oil prices and production cuts. Resource stocks in general experienced losses.26 close on Friday. and grim global economic news. Silver and gold were both under pressure from a firm dollar. “European PMIs came in weaker than expected. The TSX took a dive and analysts anticipate its six-session streak of gains will hit the skids. “Cartel members are turning on each other and pointing fingers and realize that their credibility is being brought into question. Although many expected the oil cartel to announce cutbacks in output.36 points. You can take advantage of that when the time comes. Oil futures came under heavy selling pressure and fell more than 7 per cent after news that OPEC’s anticipated production cuts were stalled. OPEC has chosen to wait until the December 17 meeting in Algeria to make the cuts. Many of the uses for silver render it useless in any other form.When our dollar values drop. falling oil prices. while still the most affordable and plentiful of precious metals. Markets are anticipating a half-point rate cut from the European Central Bank later this week. which is another negative factor for the precious metals.8 per cent against the euro.Consultant. OPEC’s failure to cut production and . “So pressure on the euro increased and stock markets came under heavy selling pressure. The dollar index gained 0. All of these factors together mean that silver. Further weakening oil prices were undermining gold and silver on Monday. By Melissa Pistilli-Exclusive to Silver Investing News Coming out of the Thanksgiving holiday weekend. Supply and demand does have a large part in determining silver prices today. On Saturday. it takes more money to buy the same amount of silver.4 per cent against a basket of currencies on Monday and the dollar also firmed up 0.” said Dresdner Kleinwort. Resource stocks were also on the decline in New York with mining stocks plunging 10 per cent. may someday actually surpass gold in desirability and price. Peter Fertig. Dollar strength is often anathema to precious metals prices and affecting silver companies. because those stores of silver that the government purchased are rapidly dwindling. but only if you buy now. Replenishing these stores of silver isn’t as easy as it once was.15 Monday from its $10. The silver quote tumbled as low as $9. Alaron Energies reporter Phil Flynn has suggested that the setback is due in part to infighting amongst OPEC’s leaders. precious metals prices experienced heavy drops in light of certain economic factors.95 per cent to 8.626. too.” The oil market is another main driver of precious metals prices. said OPEC Secretary General Abdalla el-Badri. The S&P/TSX Composite Index dropped 6. such as the medical creams and photographic supplies that require silver.
Precious metals markets will likely be further affected by economic news as more depressing U.9 from 45. The Purchasing Manager’s Index experienced its fourth straight monthly decline in November. economic data is due out later this week.2 in October. however in the long-term investors will continue to seek safe haven in gold and silver assets. Economic news out of China has also “weighed on the commodities sector with renewed urgency.” said Pradeep Unni. Information on China’s manufacturing activity compiled by CLSA Asia-Pacific Markets reveals that November experienced the sharpest contraction in manufacturing since the survey began in 2004. .S. senior analyst at Richcomm Global Services. Chief Investment Officer for the Bank of New York Mellon Corp.” said Flynn.” said senior analyst at Kitco Bullion Dealers.” No doubt this latest round of market uncertainty will cause short-term weakness in precious metals. seems to suggest that they are powerless to do anything to stop the drop in oil prices.S. falling to 40. non-farm payrolls on Friday which is likely to fall negative for the 11th straight month and by the most since September 2001. “The prime focus would be on the U. Jon Nadler. Leo Grohowski.even more importantly show a united front. has said “the economic news is going to continue to get worse before it gets better. wealth management unit.
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