Huge Gold Seller Blows Precious Metals Away for the Week, GFMS and Commerzbank Predict Silver Prices from $40 to $50 Per Ounce in 2013, WSJ Predicts QE4 Predicted in December, Fiscal Cliff Talks Continue to Rattle Precious Metals Safe Haven Bid.
Silver ended its several week winning streak in the final week of November that concluded November 30th. After it opened the week at $34.18, a nickel higher than the previous week’s spot close, silver struggled to hold the line from Wednesday and finally closed down at $33.42 by last Friday.
Even though there were a number of bullish developments for the precious metal this week, a huge gold seller that entered the market place on Wednesday trumped the predictions for higher silver prices next year, the Wall Street Journal predicting that QE4 would be announced in December, and back and forth talks that Washington continued on the Fiscal Cliff dilemma.
Huge Gold Seller Blows Precious Metals Away for the Week
Silver prices were stable early in the week until an enormous seller in gold appeared early Wednesday morning and sunk the entire precious metals complex. A Chinese customer came into the market while American investors were still sleeping and obtained January put options on strikes of 1700, 1695, and 1690 per ounce.
This positioned the Chinese to profit if gold fell below $1,700 per ounce. Selling came in following the order which caused gold and the other precious metals to fall rapidly. As sell stop orders triggered, 13,000 gold contracts were sold in a matter of minutes. Gold sold off around $40 per ounce and sympathetically dragged silver prices down temporarily to below $33 per ounce on the move.
GFMS and Commerzbank Predict Silver Prices from $40 to $50 Per Ounce in 2013
Several fundamental elements came together throughout the rest of the week to help silver prices recover to even make new six and seven week highs before they closed lower by the end of the week.
GFMS metals consultant head metals analyst Phillip Klapwijk was out promoting silver prices to target between $33 and $47 per ounce, and even possibly to reach as high as $50 per ounce, in 2013. He claimed this will come because of substantial and strong demand from investors for silver to be an alternate investment metal amid uncertain global economics.
In a separate bullish announcement for silver prices, Commerzbank declared that it expects silver prices to rise in 2013. They gave a full year price forecast of $40 per ounce for silver next year. They based this on growth in the auto industry that employs silver in many of its electronic parts, and also on higher demand from construction and housing segments of the economy.
Even more significant for silver, Commerzbank referred to a widely studied report that Johnson Matthey issued in November. This stated that there should not be a change in the supply and demand balance of silver in 2013. More importantly, the report predicted that there will be deficit supplies of silver both this year and next year. This is a strongly bullish announcement for silver prices.
WSJ Predicts QE4 Predicted in December
The Federal Reserve has already engaged in three different rounds of Quantitative Easing, where they basically create money out of thin air and use it to buy government Treasuries and other securities in an effort to strengthen the still depressed economy that tanked in 2007.
The Wall Street Journal reported that the Federal Reserve’s December meeting will announce yet more money printing and stimulus in a QE4 program. This generally supports precious metals prices, and it helped silver prices to recover and to make newer multi week highs after the Wednesday blood bath sell off transpired.
Fiscal Cliff Talks Continue to Rattle Precious Metals Safe Haven Bid
The fiscal cliff continues to approach and still no deal has been reached. Yet by this past Thursday, President Obama and congress were making more conciliatory remarks about getting a deal done. John Boehner, Speaker of the House, stated he is optimistic that they can come to an agreement before the year ends and the cliff hits. This is less supporting for the safe haven bid of silver and the precious metals.
At the same time, the hope that the economy will be saved and slowly recover is positive for the industrial complex side of silver. With other remarks from Boehner by the end of the week that little progress had been made so far on the effort to resolve the fiscal cliff, many metals traders were reluctant to hold their positions over the weekend. Silver speculative positions were sold on Friday to take the metal lower for the week, yet still were way off the week lows.
Take Away On Silver Market Prices
Silver remained in bullish territory technically, despite closing lower for the week. Because the prices swung up to a new six week high Thursday, the daily charts still show that the four week old uptrend is in place.
For it to really take off, silver needs to manage a close above $35.51, the high of October. So long as silver remains above the major technical support of $32.50 the fundamental news should help to keep the metal in its latest bullish mode.