GFMS Predicts Silver Will Rise 38% Next Year, Israel Assassinates Hamas Military Commander, Mystery Seller Unloads Large Silver and Gold Positions 3 Days in a Row, Comex Cuts Margin for Silver Contracts.
Silver remained range bound this week that ended November 16th. After it opened the week at $32.42 in spot market trade, the white metal saw some significant swings in both directions that took it as high as $32.93 before it settled back down at $32.33 just below where it began the week.
Fundamental factors for silver were bullish this week, but a few technical factors intervened to keep the metal from taking off and building on the previous week’s impressive five percent rally as would have happened otherwise.
Silver saw predictions that it will rise by more than a third over the next year, new tensions in the Middle East, someone engage in major mystery sales, and Comex announce that it will cut the margins for silver contracts this week.
GFMS Predicts Silver Will Rise 38% Next Year
GFMS is a unit of the international Thomson Reuters news giant. This past week, their global chief for metals analysis issued an forecast on silver prices. They predicted that the white metal price will go up by as much 38% in 2013. GFMS says that safe haven demand will cause this as the global economy weakens.
Low interest rates and expected higher inflation will help to spur this rise. They point to the fact that the iShares largest silver ETF in New York has seen a rise of its holdings by over four percent as evidence of this continued strong demand for silver. The price projection helped to hold silver prices up this week.
Israel Assassinates Hamas Military Commander
After some period of relative calm in the Middle East, tensions exploded once again. Israel assassinated the military leader of Hamas and promised to kill others of the terrorist organization’s leadership in the future.
Hamas retaliated with its usual salvos of rocket and missile fire that killed Israeli civilians. The mess that grew worse by the day bolstered silver prices this week too. Look for silver prices to take off along with gold if the situation escalates much further.
Mystery Seller Unloads Large Silver and Gold Positions 3 Days in a Row
With several strong fundamental bullish factors supporting silver, you might wonder why it did not perform better this week. The answer revolves around a mystery seller. A large fund appeared not one day, but three different days in a row around three minutes after ten o’ clock Eastern Time and sold major holdings of both silver and gold.
The size of their selling was large enough to be liquidation sales. The precious metals strategist George Gero of RBC Capital Markets Global Futures said that the sales were so large that they caused sell stop orders to execute, which explains why silver was unable to climb higher on a week of so much bullish fundamental news.
Comex Cuts Margin for Silver Contracts
One announcement that should have benefited silver prices and probably still will came from the CME futures exchange. On November 16, they announced that they will lower margin requirements to hold silver contracts, as well along with margins for gold and copper. Instead of having to put up $16,875 to purchase a 5,000 ounce silver contract, as of this week you are able to open it for $12,100.
They will also only require $11,000 to hold on to the contract instead of the previous $12,500. For speculators who buy large silver contracts, this amounts to a more than 28% drop in the opening margin requirements. Anything that makes it easier for investors to buy and hold silver futures contracts is bullish for the price of silver. This next week, you may see the spillover effects from this Comex decision that was friendly to silver investors, for a change.
Take Away On Silver Market Prices
Silver did not rise this week as you would have expected from the bullish fundamental factors and news. Despite the facts that turmoil broke out in the Middle East anew, that silver prices were given another bullish forecast for the near future, and that the Comex cut silver futures margin rates, the prices could not surmount the resistance levels around $33 per ounce in the face of three days of a heavy silver seller.
It also did not help silver that the US dollar index hit a two month high this past week, as silver prices are measured in dollars first and foremost. The good news for silver prices is that the metal is back in bullish territory after it hit a four week high this past Wednesday. If silver can vault past its resistance point this week, then fundamental news should continue to support it in the weeks that come.