Silver prices are sharply lower today as the selling pressure has resumed. Silver prices are now at near three year lows-and as of right now there does not appear to be any end in sight to the vicious selling the market has experienced recently.There are numerous factors currently driving the selling in the silver market.
Perhaps the single biggest driving factor for gold and silver’s demise recently has been the improvement seen in U.S. economic data. Yesterday the market got the latest readings on several economic indicators including durable goods orders, S&P Case-Shiller index, new home sales,consumer confidence, and the Richmond Fed manufacturing index.
It appears that all of these economic indicators reported results that were above consensus estimates. According to this data, and much of the data seen recently, the U.S. economy is continuing to gather steam. Today the markets got the latest reading on Q1 GDP. This number was not impressive, and was revised sharply lower. Consensus estimates were looking for a reading of 2.4% and the number came in at 1.8%.
Not exactly stellar growth figures. The stock market did however, continue its rally from yesterday as the credit crunch in China seemed to ease a bit overnight and apparently people still continue to feel better about the future despite the poor GDP number today. The question now becomes will the stock market continue its march higher or will we see it roll over? How will this potentially effect silver prices?
There are several schools of thought on this and frankly no one can see the future. Should the economic optimism continue and stocks move higher it will likely keep selling pressure on silver for the time being. Should stocks roll over and start heading lower again there is a possibility gold and silver could benefit from a flight to safety or risk off mentality.
Thus far however, we have not seen that. Like it or not, it appears that the days of the printing presses rolling at full tilt and the easy money are coming to an end. The fed is getting ready to taper its stimulus program, and interest rates have been rising. Although we believe in owning physical gold and silver as a long term investment, there simply does not appear to be a strong catalyst for higher prices right now.
Things can change quickly in this global economy and world, and we believe in precious metals ownership as a long term protection of wealth. As prices continue to move lower, there could potentially be some very attractive opportunities to add to physical holdings. No one knows just how low prices may go, therefore it is key to know your objectives in buying the metal for the long term and being prepared for price fluctuations.
This market update is provided weekly with analysis. You can always check current spot silver by watching our on-site charts.