Fitch Threat to Downgrade U.S. Credit Rating Boosts Silver

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Fed Chairman Bernake Dispels the Myth that QE3 Will End Soon, Fitch Threat to Downgrade U.S. Credit Rating Boosts Silver, German Bundesbank Will Recall Gold Reserves in A New Sign of Central Bank Mistrust, U.S. Mint Runs Out of Silver Coins with Buying at A Five Year High.

Fitch Threat to Downgrade U.S. Credit Rating Boosts SilverSilver staged an impressive rally to discredit its critics in the week that ended January 18th. The white metal actually gapped up from the previous Friday the 11th’s spot market close by more than two percent on the spot market open for Monday the 14th.

It then proceeded to rally on from the $31.08 spot market open to $31.86 by the spot market close Friday the 18th. When the dust had settled, silver had run up more than four and a half percent from Friday to Friday.

Fundamental factors supported silver all week long when Fed Chairman Bernake lay to rest the idea that QE3 would end soon, Fitch threatened the U.S. credit rating, the Bundesbank recalled its gold reserves from Paris and New York, and U.S. mint silver coin purchases reached a five year high.

Fed Chairman Bernake Dispels the Myth that QE3 Will End Soon

Silver had suffered setbacks in the previous weeks as minutes from the Federal Reserve meeting had given investors and markets the idea that the Fed might wrap up its QE3 money printing sooner than planned. Chairman Big Ben Bernake finally put this idea to rest at the beginning of the past week.

He pointed out that the economic recovery in the U.S. is still very fragile. He went on to strongly suggest that there will not be any end to the Fed’s buying bonds every month any time in the near future. This one appearance by him did wonders for silver, which moved up sharply on his statements.

Fitch Threat to Downgrade U.S. Credit Rating Boosts Silver

Speaking of fragile economics in the U.S., the country received a none too gentle reminder that its already dinged national credit rating is still on watch for additional downgrades from ratings agencies beyond S&P.

Fitch Ratings said it is very possible it will downgrade the U.S. rating if the debt ceiling is not raised soon. These uncertain deliberations in Washington continue to support silver and gold, though at times they cause volatility to the downside as well. Another U.S. credit downgrade, and even the potential threat of one, is bullish for silver.

German Bundesbank Will Recall Gold Reserves in A New Sign of Central Bank Mistrust

Probably the most stunning precious metals story of the week came out as the German Central Bank, the Bundesbank, said it will recall a large portion of its outstanding gold reserves from New York and all of its gold they store in Paris.

They claimed that this had nothing to do with fear of a world wide economic crisis or mistrust and that the moves will take place over a few years. Despite their claims to the contrary, the Bundesbank would not go through the expense and trouble to move these nearly thousand tons of gold reserves back to their own vaults if they were not nervous about economic weakness, high debt levels, and money printing schemes that the U.S. in particular demonstrates.

This has reminded investors that they should keep a portion of their valuables in precious metals like silver and gold, and maybe keep them close at hand, both of which are bullish factors for silver.

U.S. Mint Runs Out of Silver Coins with Buying at A Five Year High

To top off a week of bullish sentiment for silver, the U.S. mint announced that it had sold out of its 2013 American Eagle silver coins in only the first half of January. It is not just this event that was significant for silver prices, as this has happened before.

What is more telling is that investors purchased the most silver in five years time using the largest silver exchange traded fund, the iShares Silver Trust. This fund needed to add over 571 metric tons of silver on January 16th, and now you know from where they obtained it.

Not since the financial crisis in December of 2007 has iShares added so much silver at one time. While the mint has only suspended sales until they replenish their inventory at the end of January, silver markets took note and responded with large moves in the price.

Take Away On Silver Market Prices

This past week, Deutsche Bank pointed out that silver is benefiting from the more lackluster performance of gold lately. Commerzbank also reminded the world that investors are flushing money into silver ETF’s and that this has to cause prices to rise sooner or later.

Silver markets and investors have not forgotten that at the end of December, the Bloomberg survey from 49 different parties of investors, traders, and analysts showed that the metal could rise to as much as $40.25 in 2013.

This would represent a more than 27% gain in the metal for the year. When the fundamental news for the white metal continues to line up so bullishly week after week, it is not hard to imagine why or how this can happen.

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