Silver prices are trading just above the flat line in early trade this morning. Silver had a very volatile start to the trading week but appears to be settling down a bit now.
The Swiss referendum on gold has now come and gone. The Swiss voted decidedly “no” on the idea of the SNB increasing its reserves of gold to 20 percent of its assets. In the weeks leading up to the Swiss vote, speculation had increased on the potential outcome of the vote. This appeared to be a classic case of sell the rumor buy the fact, however. Following the “no” vote by the Swiss, silver and gold both opened for trading lower and appeared to be headed a lot lower. Silver traded down all the way to the $14.15 area before reversing.
The reversal seen in silver was quite powerful. The market exhibited a degree of volatility that has not been seen in some time. Heavy volume accompanied this reversal as well which could potentially be a good sign for the bulls. The silver market has been trending slightly higher in recent weeks, but the market still has a lot of work to do to undo recent chart damage.
The dollar index is once again moving higher today and remains at four year highs. The ECB will be meeting this Thursday. The central bank will likely sit tight for the time being and no additional action is expected by the central bank this week. This could potentially lend some support to the Euro. It is widely expected, however, that the ECB will be forced to act further in the near future and therefore any potential rallies in the Euro may be short-lived.
Stocks appear to be headed back for the highs and this is not unexpected at this time of year. The market is, however, showing some overbought signs and one has to wonder if the current buying interest will remain intact come the first of the year. This stock strength could potentially keep a lid on silver prices over the next few weeks. That being said, silver could stand to benefit in the new year as investors take stock of current holdings and potentially reallocate capital.
Demand for physical silver remains robust. It appears that investors are finding current price levels very attractive and are trying to get as much silver as they can. While the precious metals markets are definitely facing some headwinds currently, it seems that many investors are still seeing the long-term value in the metal and expect prices to rise at some point.