Silver prices are slightly higher in early trade today as stocks open flat and crude oil falls. Crude oil prices are back below the $50 per barrel level, and another leg lower could potentially be in store. Lower oil may drag stocks lower along with it, while silver and gold may potentially benefit as investors put money to work in other assets.
All eyes are on Greece and the EU right now as meetings take place to discuss the matter. Greece has already begun rolling back austerity measures set in place as part of the country’s bailout package, and tensions are mounting over the potential of a Greek exit from the EU. The country will run out of money shortly, and without an extension of its current financing Greece must seek out an alternative.
The ongoing dispute could potentially have a large impact on financial markets, though no one can say with any certainty just how a Greek exit might affect markets. Should some type of agreement be hammered out, it may signal an all clear to investors. On the other hand, should the sides not be able to come to some type of terms, it opens the door for potential panic and increased risk aversion.
In addition to the meeting regarding Greece, investors will also be watching any developments between Russian and Ukraine. Peace negotiations are taking place today in Minsk, and like the Greek situation, they have the potential to significantly impact financial markets and investor sentiment.
This week is somewhat light in terms of data release. Tomorrow markets will get the latest data on weekly jobless claims and retail sales while Friday will bring the latest data on consumer sentiment and import/export prices. Investors are likely still considering last week’s better than expected non-farm payrolls data, and whether or not it means the Fed will in fact begin to raise rates in June.
Richard Russell, the well-known and respected newsletter writer, has recently stated that he believes a period of deflation is on the horizon, and that hard times may be ahead. He advised his subscribers to sell common stocks and buy gold and silver citing increasing debt and the state of the world’s balance sheet.
While it remains too early to tell, stocks have been showing some signs of a potential top. Increasing volatility and the market’s inability thus far to move higher could potentially be indicative of topping action. Should this prove to be the case, gold and silver could potentially benefit as investors look for alternative assets to put capital to work in.