Silver prices are drifting slightly lower this morning while gold is slightly higher. The dollar index is trading flat this morning while stocks and crude oil are both moving lower. Markets appear to be attempting to find their footing following the Veteran’s Day Holiday Yesterday.
Silver still appears to be trying to find a bottom. The silver bulls have struggled to maintain any upside recently. The market is currently winding into a triangle on the daily chart and could potentially be setting up for another decent sized move. The bears remain in firm control of the silver market and the bulls have a lot to prove before more fresh buying interest may be seen.
Higher stocks, lower crude oil prices and a higher dollar are all inflicting pain on the silver market right now. Both stocks and the greenback look as if they could be in the midst of another large leg higher in prices, and one has to wonder if this will continue to cause selling in silver should it prove to be the case.
So, as the silver market appears to be lacking some type of bullish catalyst, what could possibly turn silver prices around? Low silver prices…. After reaching the $15 per ounce level recently, demand for silver has increased dramatically. Rising dealer premiums very clearly tell the story that supplies are running low and demand is running high. In fact, some dealers reported running out of stock while others reported selling more silver late last week than they had in months. Where is the demand coming from? Often times, as silver or gold prices dip, demand tends to pick up from certain places, like India for example. India is a large consumer of precious metals for jewelry making and investment purposes.
In this instance it appeared that demand was coming from other places as well. There are unconfirmed rumors of heavy demand for silver eagles coming from Europe. Wherever the demand came from, the rush of demand for these coins caused the U.S. Mint to suspend sales of the American Silver Eagle. This would make it seem clear as day that demand for precious metals at current price levels is growing. This physical demand for relatively cheap silver may be exactly what drives the market higher. This could occur even in spite of rising stocks, lower oil, or a stronger dollar. The laws of supply and demand will prevail.
The silver bulls have their work cut out for them, no doubt. The demand seen recently, however, is very encouraging and could very well cause the price of silver to rise regardless of outside market influences.