The week started with a quick pullback from the opening silver price of $16.85, but came back on Tuesday with a slight gain at $16.87. Some attributed the dip on Monday to the positive impact on the market of the election of Donald Trump as president. However, the impact of the Italian referendum reminded the market that all is far from well on a global basis.

The trading range on Tuesday moved into the week’s high on Wednesday of $17.21. Discussions in the markets continued to focus on President-elect Trump’s predictions of a strong economy in 2017. This, along with the markets turning their attention to the Federal Open Market Committee meeting, created more downward pressure on silver prices, with the close matching the week’s high at $16.87.

Silver is sitting with other precious metals in something of a “wait-and-see” mode. The markets know an increase in interest rates by the Fed would normally create downward pressure. At the same time, many believe that possibility is more of a probability and already priced in. 1 There is also growing concern in the markets about what will happen when the rally created by the president-elect’s optimism winds down.

At the heart of the current market is the confidence long-term buyers of silver have in demand for the metal. Numerous reports are indicating a shortfall of supply of silver in the face of increasing demand. 2 This, of course, is the fundamental scenario for rising silver prices.

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Moreover, the current markets show little influence from the Italian vote and other looming threats to the global economic picture. The concerns over Spain’s banks, Greek debt, and the eventual impact of Brexit are only a few of the several situations that are individually capable of creating a major financial crisis. 3 The possibility of such events is why long-term investors always see value in holding silver.

Additional Sources

1 – http://www.cnbc.com/2016/12/09/why-the-fed-will-no-longer-be-the-big-deal-when-it-meets-this-week.html
2 – http://www.silverinstitute.org/site/supply-demand/silver-demand/
3 – https://markstcyr.com/2016/12/06/the-equation-that-explains-it-all/