by Jack Lee
Last week we saw the price of silver climb 1.5% based on little more than a mildly favorable FOMC report that suggested cash rates shall remain unnaturally low for longer than we expected. This has kept the price of silver supported, but for how long and that’s the rub. Investors worry that silver set for a tumble and sometimes investor sentiment is enough to tank a stock or in this case an ETF like SLV.
If the Feds leave the cash rate low it could add to silver’s climb, but don’t get your hopes up too much. This is the week that Janet Yellen, Chair of the FOMC will testify before the Senate Banking Committee and the House Financial Services about the Semi-annual Monetary Policy Report. Yellen has hinted recently that she thinks the economy is plugging along ok and inflation isn’t a great concern at this time. This could push silver under $19 an ounce and so goes SLV too.
The fact that silver is off to a terrible start this week and erased all the gains of last 3 weeks and a lot more, does not bode well for a bullish silver spot price. Yesterday’s gloomy headlines read,” The price of gold experienced today the sharpest price decline of 2014. Although it was usual to see these corrections last year, they have been scarce in 2014. Gold futures in USD closed 2.18% lower on the day while silver futures in USD declined 2.24%.” Bottom line; This probably isn’t the time you want to be in silver.
Disclosure: Author has just gone short on silver ETF (SLV)
UPDATE: Events as of 7/16/2014 in Iraq, Israel and the Ukraine have spooked the precious metals market, scared money runs to precious metals…shorting is not advised.