Conditions in the silver market last week mirrored those in early June right before the white metal rallied briefly: the gold silver ratio was at historic highs and market fundamentals pointed to worsening economic conditions fueling a spike in safe haven demand, evident already in the rise in purchases of American Silver Eagle coins. These signs and more suggest it’s not a matter of if silver will rally but when.
What other forces in the silver market generally move prices? Read “10 Factors that Influence Silver Prices.”
Silver Price Movement Indicators
Monday, July 23, 2018
Silver Coin Sales
On Monday, CoinNews.net reported that U.S. Mint bullion sales of American Silver Eagle coins increased by 190,000 ounces, putting the July total so far at 735,000 coins sold. Year-to-date, the Mint has sold 7,557,500 silver eagles. While traders may be selling off base metals in fear of declining demand from China, individual investors are clearly hedging against rising inflation and the predicted recession with these popular silver bullion coins—AGAIN. Demand was so great after the global recession of 2008, sales of American Silver eagles were suspended. Savvy investors are buying now before the next financial crisis hits.
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Silver prices started the trading session strong at $15.49 but pulled back to $15.33 at 3 pm and 6 pm.
Tuesday, July 24, 2018
Rising Oil Prices
After decreasing over market concerns of a supply surplus, oil prices rebounded following an announcement that Saudi Arabia would reduce exports in August. Reports of plans to ramp up infrastructure spending in China also allayed fears of trade-war-related demand declines from the world’s second largest economy. ‘That’s going to be very bullish for oil demand. … Infrastructure spending from China in the past had really jacked up oil demand, and I think that’s adding some outside support for prices,’ said Chicago-based Price Futures Group Analyst Phi Flynn. Brent crude reached a session high of $74 and West Texas Intermediate peaked at $69.05.
Rising inflation and recession usually accompany climbs in the price of oil. Viewed as a hedge against inflation and economic downturn, gold and silver prices typically follow crude prices. Silver prices crawled from the low $15.31 at 3 am to the high of $15.33 at 11 am.
Wednesday, July 25, 2018
Increasing Silver Mine Production
Wednesday brought news of rising silver production at the world’s largest silver mine, Fresnillo’s. The company’s seven Mexican mines produced 15.34-million ounces of the white metal in the second quarter of 2018, representing a 5.7 percent jump year-on-year and 1.6 increase quarter-on-quarter. Its output at the midpoint of 2018 stands at 30.76-million ounces.
Higher supply of silver mine output could eventually weigh on prices. However, collectively, mine production has been declining in recent years, as well as contributions from silver scrap. So far this year, other mines have reported decreases in production. If silver demand rises as geo-economic and geopolitical tensions escalate, the silver supply and demand equation could still favor higher silver prices.
The price of silver was certainly higher on Wednesday, gaining .9 percent at $15.58 an ounce after rising to an eight-day high of $15.63.
Thursday, July 26, 2018
Thursday’s news headlines triggered flashbacks of the 2008 financial crisis. In “Deutsche Bank Continues to Fail which Could Ultimately Lead to a Massive Banking Crisis,” Josh Sigurdson of World Alternative Media reported that Deutsche Bank suffered its worst second-quarter performance since the big banking meltdown 10 years ago. Recently, the S&P downgraded Deutsche from an A- to a BBB+. The bank also failed to pass the Fed’s stress test and has been accused of rigging the silver markets on more than a few occasions. Faced with these and other problems, Deutsche is planning on letting go 10,000 employees.
Arguing the all banks are insolvent right now, Sigurdson said Deutsche would be the first to “fall in a domino effect of great magnitude as the banking system crumbles at the seams.” Check out the full article.
Viewed as a hedge against financial crisis, silver prices would likely skyrocket if Sigurdson’s predictions come true. On Thursday, however, the range for the price of silver remained tight: the high $15.58 at 1 am was followed by the low of $15.34 at 5 pm.
Friday, July 27, 2018
Market analysts are once again buzzing that silver is set to outperform gold in the next couple years. In an article titled, “Silver: The Best (And Only) Opportunity Today,” an analyst from Nairu Capital argued that the macroeconomic fundamentals of decelerating economic growth and increasing inflation should result in higher silver prices. Approaching record highs again after briefly reversing last June, the gold silver ratio also points to an imminent silver price breakout. Lastly, technical positioning could set off the coming silver rally.
“With the S&P 500 looking quite frothy, bonds returning less than inflation, and macroeconomic concerns rising investors need a safe-haven investment with large potential upside in order to maintain return targets,” wrote the analyst. Read the full article.
Silver prices gained 20 cents from the low of $15.30 at 6:40 am to the high of $15.50 at noon.
What are other experts predicting for silver this year? Read “Why Buy Silver in 2018?”
Where are prices for the white metal now? See our Spot Silver Price Chart.