Silver prices are fairly quiet this morning as stocks lose a little ground and the dollar index weakens a touch.
This week has once again been primarily focused on stocks as the SP 500 index has finally printed the big, round 2000 number. The question now becomes-can the market hold current levels? Time will tell but thus far markets seen intent on continuing their ascent higher. Of continuing importance, however, is the fact that bond and note yields continue to edge lower. Weak data out of the Euro zone may be partially to blame for the German bund hitting a record low yield of just .92 percent, but there may also be other concerns at play such as the current geopolitical environment.
Because of the ongoing weakness in economic data, the ECB is likely to begin further easing measures, and this is pressuring the Euro and thus boosting not only Euro zone bonds but the dollar index as well. How does silver fit into all of this? Well it is becoming seemingly more likely that at some point the equities rally will exhaust itself. At this time is potentially when we will see more sustainable buying come in to silver and precious metals. It seems that for now, however, stock strength and dollar index strength are simply too much for the silver bulls to bear.
Silver and precious metals may find some continuing support in the form of perceived safe-haven buying, but thus far markets have largely shrugged off the current conflicts in the Gaza strip and Ukraine. Obviously, these are situations that could potentially turn for the worse very quickly, so the notion of a significant drop in silver or precious metals seems somewhat unlikely.
Although silver is in a very clear downtrend, prices have held their lows over the last five sessions. Silver could potentially be finding a bottom here as the selling pressure appears to be drying up as bargain hunters step in and buy. The silver bulls need prices to climb back above the $20 level. This could potentially force short-covering as well as buy stop triggers. Silver saw a good amount of volume come into the market yesterday, which could also potentially be indicative of buyers stepping in.
Silver may be fairly quiet the rest of the week as the U.S. prepares for the long labor day weekend. This weekend is the unofficial end of summer, and many investors may be squeezing in some last minute vacation time. Silver will, however, continue to take its cues from stocks, the dollar index and geopolitical headline risk.