Precious Metals

Silver put on a positive show at the start of the week, but pressure returned ahead of the EU summit,

Silver started the week by clawing its way back above $27. In India, a divergent trend was reported as the white metal rose and gold declined. Industrial purchasing was credited for the upward price movement in that market. The metal’s positive performance during North American trading was largely attributed to short covering and bargain buying, which on Monday resulted in a New York closing price of $27.54. However, silver’s upward momentum was not sustained, and price declines deepened throughout the week.

By Wednesday silver could no longer stay above $27. The metal’s final New York price was $26.90.

Negative price action continued Thursday, which marked the kickoff of a two-day European summit.

Ahead of this meeting, the silver market appeared to be in waiting, with the terms “light volume” and “thin market” commonly used in conversations about the white metal. There were reportedly no changes in SLV holdings prior to the meeting, and from futures to the silver coin market in India, only a limited number of investors were active. Some traders and analysts expressed the belief that it is best to wait on the sidelines until there is some certainty about the outcome of the meeting.

ETF investors last week added 160 tons, boosting silver holdings to their highest level this year.

Commodity Futures Trading Commission data revealed a continued lack of optimism in the futures market. Silver was again the only precious metal to see declines in net speculative length. Speculative shorts added 140 tons.

Many market participants believe that further price declines may be in the cards. Earlier this week, we reported that there have been numerous warnings about how severe declines will be if silver falls below $26.

As the metal flirted with last week’s lows, MKS senior trader Alex Thorndike warned that there are likely some chunky stops lurking below current levels. He said “[i]f we get closer, especially considering how thin this market is currently, we could see larger players gunning for these” to drive silver prices lower.

At times on Thursday, silver hovered above $26 by less than a dime.

What European policymakers do or fail to do is not expected to be known until sometime Friday afternoon. However, expectations that the meeting will produce meaningful near-term solutions to the region’s ongoing and expanding crisis are extremely low. This is not a place to find speculation of what the outcome of the meeting will be, but silver investors are encouraged to be prepared and are forewarned that potentially severe volatility could be in store.

The close

At the end of floor trading, July COMEX silver was down $0.84 at $26.09, having managed to achieve a fresh one-and-a-half-year low. Silver on the New York spot market closed down $0.62 at $26.32.

Company news

Alexco Resource (AMEX:AXU,TSX:AXR) reported that production at its Bellekeno facility is back online following a precautionary mine shutdown. Mine activity was halted on June 22 after a lightning strike triggered a wildfire near the property.

Huldra Silver (TSXV:HDA) closed the first tranche of previously announced, non-brokered private placement financing. The company issued 1,173,332 flow-through common shares at $1.20 each for $1,407,999.


Securities Disclosure: I, Michelle Smith, do not hold equity in any company mentioned in this article.


S&P 5004280.15+72.88


Heating Oil3.51+0.03
Natural Gas8.78-0.09