Spain’s Credit Rating Cut Weakens Precious Metals

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Spain’s Credit Rating Cut Weakens Precious Metals, Prices, Silver Wheaton CEO Anticipates $50 Per Ounce Silver, Silver Ranks with Gold in China’s Golden Week Holiday, Precious Metals’ Analysts Become More Bullish On Silver, Support and Resistance Guide on Near Term Movement For Silver.

Spain's Credit Rating Cut Weakens Precious MetalsIt was inevitable that silver would finally post a substantially down week in light of the many weeks that it has consecutively and consistently risen. For the week that ended October 12th, silver declined more than a dollar per ounce versus its spot market close on the previous Friday, October 5th.

At the $33.45 weekly spot price close on October 12th, it was down just over fifty cents per ounce from where it started Monday and the beginning of the week. Strong resistance levels proved to be the main culprit that held silver back in a week where analysts and investment banks continued to call for higher silver prices in the quarters and year ahead.

Spain’s Credit Rating Cut Weakens Precious Metals’ Prices

This week, Spain suffered another two notch credit rating cut at the merciless hands of Standard & Poor’s ratings agency. This put the kingdom’s failing credit rating at only one step above the dreaded junk level that would make it all but impossible for the Spaniards to access credit markets for their borrowing needs.

The action increased the likelihood that Spain will request a financial bailout from the Euro Zone nations, which would then enable the European Central Bank to buy their bonds to lower Spain’s costs to borrow money. While medium to longer term, Commerzbank states that these actions may support precious metals prices, this week these events helped to knock them down on a belief that the Euro crisis will be controlled and market uncertainty will diminish.

Silver Wheaton CEO Anticipates $50 Per Ounce Silver

For 2013, CEO Randy Smallwood of Silver Wheaton anticipates that silver will rise to between $40 and $50 per ounce. He bases his sky high estimates for the white metal on the new money printing exercise that the Federal Reserve has begun.

The Fed has committed with Quantitative Easing 3 to print a new one trillion dollars per year until further notice when the economy improves substantially enough to bring the unemployment rate back down to the five percent level. This could be a multi-year endeavor with unemployment still hovering around a stubborn almost eight percent that it has hugged for years.

Silver Ranks with Gold in China’s Golden Week Holiday

China celebrated its National Day Holiday week known as Golden Week the first week of October. Both gold and silver jewelry experienced a dramatic increase in sales this festive Chinese week. Demand proved to be better than had been expected. This supports silver prices now and for the near future.

Precious Metals’ Analysts Become More Bullish On Silver

Reuters takes a poll on silver and gold prospects every so often. They survey analysts, who now expect gold to rise and to take silver prices higher with it. James Moore of FastMarkets summed up the analyst consensus well with his belief that silver will continue to rise next year, largely as a result of the increase in appetite of investors for the white metal.

Support and Resistance Guide on Near Term Movement For Silver

The good news for silver is that the silver futures for December still show the bulls to retain command of the near term technicals. Even though silver had a down week, the silver prices remain in a ten week long uptrend. For the price rise to resume, silver needs to close above the prior week’s high of $35.445 per ounce, which is substantial technical resistance. The bears are aiming for a close below the significant technical support level of $33.36.

Take Away On Silver Market Prices

The ten week old silver uptrend currently looks a little tired. For silver to continue its relentless rise based on technical factors, it needs to log a powerful close over $35.445 per ounce and soon. Fundamental factors still strongly favor the white metal, as demonstrated by Silver Wheaton CEO’s comments, by analysts who are more bullish on silver prices in the near future, and by continued strong Chinese silver jewelry demand.

Uncertainty still rages on in the EU sovereign debt crisis, and this continues to support safe haven silver bids. At least until they manage to prove that they have overcome their major problems on the continent, and central banks of the U.S. and the rest of the world cease their drive to print more money, silver still has strong legs to hold it’s price up.

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