Silver prices are trading slightly higher as oil prices are flat and stocks move higher today. The silver market is trying to stop the bleeding today following some decent selling pressure yesterday. The selling in precious metals yesterday seemed to be a bit baffling to many-and many different explanations were being made including stop running, tax selling and profit taking. The silver market seems quite comfortable in its current trading range, and lacking some type of catalyst could potentially trade sideways for the foreseeable future.
The situation in Ukraine continues to be a cause for concern for global markets. Ukraine has now launched special operations in order to try and deter protestors and pro-Russian militants in the East. Although widespread violence has not yet erupted in the region, it seems that the possibility is getting stronger. Perhaps the lack of violence thus far is why markets have seemingly discounted the ongoing crises. The situation could turn on a dime, however, and a risk off situation in global markets could potentially erupt. Should this occur, silver prices could potentially stand to benefit.
Investors also continue to monitor the equities markets closely. Stocks have seen higher volatility recently and are showing some signs of further weakness. While no one can tell for sure if a top is being put in right now in stocks, this type of volatility can be seen at market tops or bottoms. One could certainly make the argument that silver may have a hard time moving higher without some help from equity weakness. The fact is that the economy appears to be continuing to mend, and the days of the easiest money are over. It has yet to be determined how gold and silver respond to rising interest rates, but the time is approaching.
It is indeed somewhat difficult to make a compelling case for the silver bulls right now. Even with the crises in Ukraine, silver prices have not taken off. Although physical buying in silver appears to be relatively consistent, demand has remained somewhat “lackluster” as investors continue to chase yield in stocks and risk assets. On top of this, inflation remains well subdued and is not doing silver any favors either. It seems that the potential catalysts for higher silver right now could be increasing geopolitical risks or a further correction in the stock market. Unless one of those issues is encountered, silver may stay very much a range bound market for the time being.