September’s US Employment Report Keeps Lid on Silver Prices

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September’s US Employment Report Keeps Lid on Silver Prices, Hedge Funds Make Big Silver Bets That May Cause Silver to Outpace Gold, Futures Veterans Anticipate Higher Commodities Prices in 4th Quarter, Deutsche Bank Sees Substantially Higher Silver Prices in the Next Year.

September's US Employment Report Keeps Lid on Silver PricesSilver continued to hold on to its recent impressive gains for yet a third week. While it did not make any new ground in its relentless drive towards the upper thirties per ounce, it did weather some news that tended to knock down precious metals prices this first week of October.

Silver spot started the week at $34.65 and ended at $34.51. In a surprise announcement from the labor department, this week’s employment report came out stronger than expected. At the same time, a number of mainstream investment banks and analysts raised their price targets on silver for the next quarter and year. Hedge funds also continued to accumulate silver with an insatiable appetite, which helped to underpin the white metal prices too.

September’s US Employment Report Keeps Lid on Silver Prices

The consensus among economists for the past week was not for the labor market to improve. The September employment report for the U.S. added 114,000 jobs, strong enough to reduce the unemployment rate to 7.8%. This was the first time the critical jobs number had dropped below 8% since it blew through it in the Great Recession.

Gold and silver took a breather in light of the stronger than anticipated economic data. Despite this reaction, Senior Commodities Broker Dan Pavilonis of RJO Futures said he believes that silver will still run towards the $36 per ounce target as a result of its technical charts that are so bullish.

Hedge Funds Make Big Silver Bets That May Cause Silver to Outpace Gold

Gold has typically outperformed silver during the bull market run. Now, the hedge funds have acquired positions that show silver could outpace gold as the central banks continue to print money out of thin air.

Hedge funds now hold 30,986 silver futures and options on futures as of the week that concluded September 18th. This represents the greatest number of long positions since February 28th. What does this mean in layman’s terms? Silver purchases are up ten times from June levels. Investors have acquired $797 million worth of the white metal for over 717 metric tons in the third quarter alone.

Financial news provider Bloomberg says that recent historical precedents show when governments printed money, silver actually outpaced gold gains. Silver ran up over 50% from December of 2008 through March of 2010 after the Federal Reserve’s QE1 program and more than 24% after QE2 from June 2011. This represented two times and three times the gains that gold made during the same period.

Futures Veterans Anticipate Higher Commodities Prices in 4th Quarter

Veteran futures traders also expect to see higher precious metals prices in the fourth quarter. O’Neill and Epstein call for higher gold prices that range from $1,850 to $1,900. Platt says silver is well supported on any price dips and believes that it could reach from $36 to $38 per ounce.

Deutsche Bank Sees Substantially Higher Silver Prices in the Next Year

Deutsche Bank became the latest mainstream financial institution to call for higher silver prices this first week of October. The German investment and currency bank said that the concern that surrounds the fiscal cliff at the end of the year, along with QE3, will benefit precious metals as it suppresses the U.S. dollar value.

Specifically, they believe that the silver prices for the fourth quarter will average $37 per ounce. For 2013, Deutsche Bank call for an impressive $44 per ounce average silver price, which represents a three percent rise from their last estimate.

Take Away On Silver Market Prices

Everyone from Commerzbank and Deutsche Bank to Bloomberg and various private analysts and hedge funds now see higher silver prices in the near future. Hedge funds continue to pile on silver positions as they are confident it will outperform gold in the months and years that come.

Even the improvement in the U.S. economy, that dealt a short term blow to silver and gold prices this week, may come to be seen as longer term bullish for silver, as the white metal finds 50% of its demand from industrial applications.

Silver will not move all up in a straight line, but pullbacks along the way look set to present excellent opportunities to buy in and catch the further upside movement.

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