Silver Breaks Out Convincingly Above Technical Resistance this Week

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London Bullion Market Rumored to Be Running Silver Shortages Amid Large Purchases, Bullish Federal Reserve Meeting Minutes Boost Silver Prices, Silver ETF Holdings Continue to Rise.

Last week we watched with rapt interest as silver closed at $28.09, just within striking distance of the $28.45 technical resistance. For the white metal to be in a full on bullish pattern again, it had to break through this significant price barrier and close above it on a daily, if not a weekly, basis.

As we told you before, with all the economic news and bullish developments that continue to emerge in silver markets, it was just a matter of time until the precious metal vaulted through this level. The week ending August 24th was the magic moment for silver in its latest quest to prove all of its detractors wrong.

Silver Breaks Out Convincingly Above Technical Resistance this Week

Silver smashed through this 75 day moving average in its first attempt in four months to move convincingly and definitively higher. The prognosticators held out another level as well for silver to close above in order for its present aggressive bullish run to be confirmed.

This level was $30 per ounce, which silver managed to break through and close above when it finished Friday, August 24th at $30.82. This puts it on target to move back towards its $37 price level, the highs that it achieved last February. It is worth you noting that silver led gold on the trading range breakout this week. This does not happen very often.

London Bullion Market Rumored to Be Running Silver Shortages Amid Large Purchases

The important question is what caused silver to break out of this trading range this week that it had fallen into for the last several months. Mainstream media did not bother to investigate the most important rumors this week that surrounded silver.

Bill Murphy at the website LeMetropoleCafe reported on rumors of major accounts that purchased silver in London, where world silver and gold trade are based at the London Bullion Association. The rumors were further bolstered by various stories that London Bullion Market Association members had difficulties obtaining their delivery of silver this week.

The mere fact that such rumors emerged proved to be the single largest driver of silver in its impressive rise of nearly ten percent just this week. Silver is such a small and thinly traded market in the grand scheme of markets that these kinds of stories have the power to move the white metal massively, even if such stories turn out to be only partially true.

Bullish Federal Reserve Meeting Minutes Boost Silver Prices

Macro economic events from the US and Europe also continued to support silver prices throughout the week. The Fed released its much anticipated Federal Reserve meeting minutes Wednesday afternoon that showed a majority of members are in favor of additional quantitative easing unless the economy improves substantially in the near future, which means more money will be printed before long.

Markets had hoped for this news, but were still taken by complete surprise. Both gold and silver prices rose significantly after the minutes, and silver reached $30.21 by Thursday morning. This close over $30 put it in firm position to make a next leg up to the February $37 per ounce levels.

European economic news continued to contribute to the uncertainty and fear that helps to drive silver and the other precious metals higher as well. The European Purchasing Manager’s Index came in weak and in contraction territory. This lends further credence to the worry that the entire EU as a whole is falling back into another recession.

Silver ETF Holdings Continue to Rise

It should not come as a shock to you that money continues to pour into silver backed products as a result of silver’s consistent moves higher. Last week, we told you that silver exchange traded products had recently achieved their record amount of physical silver holdings. They continued to rise this past week as money flowed into silver in droves. Silver holdings in ETF’s finished the week of 8/24 at 18,164 tons, according to Commerzbank.

Take Away On Silver Market Prices

Analysts are finally lining up behind and in favor of higher silver prices as technical levels and fundamental strength continues to impress the critics and silence the silver bears. Deutsche Bank this week added its voice to the chorus that calls for higher silver prices soon.

They believe that silver and the precious metals achieved an important inflection point that proved to be convincing, in large part because of the Wednesday Federal Reserve meeting minutes release. Silver resistance levels are shattered, and this development points to silver prices that they believe will continue to rise over the next several weeks. In light of the silver holdings and prices that continue to rise, silver bears had best beware and watch out for their negative silver positions.

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