Imminent Fiscal Cliff Threat Gives Silver Reason to Run Up

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Obama Re-Election Significantly Boosts Silver Prices, Imminent Fiscal Cliff Threat Gives Silver Reason to Run Up, Fresh Tensions with Iran Encourage Safe Haven Bid for Silver, Silver Rebounds Sharply from $31.00 Technical Support.

Imminent Fiscal Cliff Threat Gives Silver Reason to Run UpAfter more than a month of silver price declines, the white metal finally posted a dramatic turnaround in the week that ended Friday, November 9th.

Silver snapped its multi week losing streak by posting a five percent price rise from the previous week’s spot market close of $30.92 to finish off November 9th spot market close at an impressive $32.59.

There were a variety of factors that caused this important rally. The closure to the Presidential election, approaching and still unresolved fiscal cliff danger, new tensions with Iran, and bounce off of a crucial support level all worked together to catapult silver back to the higher end of its recent trading range.

Obama Re-Election Significantly Boosts Silver Prices

However you felt about the results of last week’s U.S. Presidential election, it certainly was bullish for silver prices and precious metals prices in general. The re-election of President Obama was seen as a precious metals positive because it means that the super accommodative monetary policies of Federal Reserve Chairman Ben Bernake will likely continue for another term.

This means that silver will continue to be in demand as a hedge against their devaluing of the dollar. Obama’s opponent Mitt Romeny would have put another more hawkish Fed Chief in place who would have probably brought an end to the lower interest rates and also stopped printing money. Silver responded strongly to the President’s win and never looked back this past week.

Imminent Fiscal Cliff Threat Gives Silver Reason to Run Up

Silver also began to react to another threat that looms ahead in its role as a safe haven asset. The fiscal cliff is the point in January where the former President Bush’s tax cuts will expire at the same time as an enormous amount of spending cuts automatically kick in. Congress has so far failed to address the issue with less than two months until it explodes.

Once the Presidential election ended with a decisive result, this fiscal cliff topic began to dominate the financial media at last. Analysts and investors began to price in the possibility that the issue will not be resolved in time. This propelled silver prices higher still.

The issue is likely to continue to support and move silver and gold prices up in the weeks ahead if congress and the President can not come to a satisfactory compromise that saves the U.S. economy from falling off the fiscal cliff and into the accompanying recession that economists agree this would cause.

Fresh Tensions with Iran Encourage Safe Haven Bid for Silver

You can always count on Iran to say or do something antagonistic to bid up the prices of oil and precious metals from time to time. This past week, everyone’s favorite rogue nation made headlines when the US claimed that Iran’s air force fired on an American drone that was flying in international air space.

That same weekend, Saudi Arabia declared to Iran that it will not accept Iranian fighter planes trespassing in Saudi Air Space anymore. Silver benefitted from the latest Iranian salvo and rose on a safe haven bid as the precious metals always do when Iran gets involved.

Silver Rebounds Sharply from $31.00 Technical Support

On top of all the fundamental reasons for silver to rally hard this week was a technical one. The white metal had closed the previous week that ended November 2nd just under the important $31 technical support level. It was either going to break hard to the downside or rebound from the support level this past week.

With all the strong news that supported silver, it held the $31 line and rebounded hard in a sharp technical bounce from there. Back above $31 and then $31.50, the metal had technical power behind it once again. It stopped just shy of the previous week high of $32.69, which is the next upside objective for the bullish forces in silver.

Take Away On Silver Market Prices

Silver had its best week in a long time after over a month of significant price declines this week that closed 11/9. Between the re-election of the President and his big spending and easy monetary policy administration and the fiscal cliff that looms just ahead, silver has gained new fundamental life. The metal always rallies when the situation in the Middle East heats up as well.

Technical forces met fundamental ones half way to power the white metal up over five percent. This next week may prove a critical test of whether silver can mount a charge above the $32.69 bullish price objective or whether it will remain range bound between $30.92 and $32.59 for now.

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