Silver prices are flat today as a lack of headlines as well as stronger stocks lessen the appeal of precious metals. As the SP 500 hits a new all time high today, one has to wonder just how much gas may be left in the tank. As has been the theme for some time, it seems that markets are still able to shrug off all the negative things going on around the globe right now as investors continue to chase returns. The fact is, there is no telling when or where the stock market rally may end. There has been recent talk of a potential bearish divergence as small caps are looking toppy while the broader market moves higher, but thus far there has been no confirmation of a market top in equities. Silver and precious metals appear to be trying to bide their time until there is a break in equities, although there are still no concrete signs of a potential break.
The IMF today even lowered its U.S. growth outlook for this year to the lowest pace since the end of the recession in 2009. The IMF projected growth of just 1.7 percent for this year, which is down from its earlier projection of 2 percent in June. The lower rate of growth was attributed to a sharp contraction in the first quarter that was weather related. The IMF did go on to say, however, that they feel optimistic about the U.S. economy going forward.
It seems surprising that risk aversion is not higher given current geopolitical affairs. Whether or not markets can continue to keep their cool remains to be seen, however, and there are numerous powder kegs that could potentially derail the stock market rally. For this reason, it seems quite plausible that gold and silver may continue to trade relatively range bound. Although anything is possible, it is difficult to imagine seeing precious metals fall significantly from current levels given many of the potential wildcards out there in the world right now.
Silver prices have not done much this week. Summer time market action often means there is simply not much to report-and this summer is not proving too different thus far. Silver prices do appear, however, to be coiling up in a tight consolidation pattern that could potentially lead to a breakout one way or the other. Last week’s low of $20.63 may act as support, while last week’s high of $21.31 may act as resistance.