All things being equal, it has been a very quiet week for silver prices. The silver market continues to trade in a tight range on the daily charts still looking for the catalyst that will cause either an upside breakout or a downside breakdown. The market seems very comfortable in the $19-$20 area but obviously we do not think prices will stay here forever. This is an extremely busy week data wise and many investors feel that the near term future for gold and silver prices will likely be determined this week.
One of the biggest highlights of the week from an economic data standpoint is the FOMC policy announcement which was released just a few moments ago. Unfortunately, the release does not appear to be having much impact on the precious metals, or any market for that matter. The Fed reiterated that it would increase or decrease its asset purchases as it sees fit. The Fed sees downside risks to the economy and labor market “Diminishing.”
In a small change in language, the Fed characterized the economic growth as “Modest” rather than “Moderate.” How much can be read into this small change we do not know. It would seem however, that the Fed does have remaining concerns about the economy and its ability to stand on its own two feet. No mention was made of tapering in September, although many still believe that the Fed is on track to begin doing so that month.
Markets are quite mixed following the statement, with the dollar lower as of this post, while stocks and precious metals are lower as well but well off of their lows at this point. Judging from current market action, it does not appear that this announcement is giving the silver market enough to make a decision on where it goes from here. The market does have Friday’s non-farm payrolls report still to digest, and perhaps that key report will offer more clues as to the health of the economy at this point.
Demand for physical silver remains strong. In fact, we believe that the appetite for physical silver and gold bullion will eventually drive prices back to where they came from and beyond. In our opinion the only question is when.
For now, we are watching for a range breakout in silver. We are leaning towards an upside breakout as it appears that demand has met supply at current price levels. Markets do not go straight up or straight down-and silver is no exception. We also believe that there are remaining concerns about the health of the economy.
Anyone look at what copper prices have done in recent weeks? The falling price of copper is alarming to us as copper is seen as a barometer of overall economic health. Should things start to deteriorate again economically, we feel that silver could stand to benefit as investors cash in on recent stock gains and look for alternative vehicles in which to put money to work.
This market update is provided weekly with analysis. You can always check spot value of silver by watching our on-site charts.