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Silver has remained above $27 this week but is stuck in a tight range.
Silver managed to resist a close below $27 on Thursday. However, during the week, intraday prices did fall below that level as trading was often choppy. On an upside, silver managed to close each day back within the tight range in which it seems to be growing increasingly comfortable.
Some market participants were surprised that last Friday’s soft Chinese manufacturing data was spun into a positive development. For at least two reasons, this should not have been surprising at all. To begin with China’s GDP did show slowing growth but was still widely within expectations. Also, this is a market environment where negative is positive and positive tends to be negative because the market is looking for worldwide easing.
The United States is undoubtedly the preferred source of such action and given that preference, it came as no surprise that Ben Bernanke’s two day testimony on Capitol Hill was a focal point this week. But, as the Fed has taken a wait and see approach, so too have silver investors. There are no longer major shifts in either direction in anticipation of or disappointment following these events.
The silver market started this week under pressure and spent a lot of time trading in negative territory on Monday, with the price at times below the $27 level. However, market participants really found nothing significant to prompt drastic action and silver managed its way back near its starting point, closing on the New York spot market and the first day of trading at $27.31, down a just three pennies.
Silver was up ahead of the first day of Bernanke’s testimony on Tuesday. The market was watching and the testimony was poured through with a fine tooth comb for indications of QE3. As usual, there was speculation on both sides but ultimately nothing of significance was shaken out. Wednesday, the New York closing price was down a mere $0.13 at $27.18.
Market participantion still tends to be light. Though QE3 headlines are not prompting the volatility seen earlier in the year, it is still widely expected. Anne-Laure Tremblay, Precious Metals Strategist for BNP Paribas, says uncertainty around the timing for further monetary stimulus is likely holding back interest in gold or silver.
Commerzbank says investors clearly view the $27 price level as an attractive opportunity to buy, which means higher silver prices. This comment came as the bank reported a rise in silver holdings by the ETFs tracked by Bloomberg. With recorded inflows of 141 tons, their highest in absolute terms since mid-January, Commerzbank says this brings holdings to the highest level since May 2011.
The US Mint has also reportedly sold over 1 million silver eagles this month.
Meanwhile, the latest Commitment of Traders report reveals that after moving in the positive direction during the previous reporting period, net speculative length declined again during the week ended July 10. The drop, however, was comparatively small with only 216 tons lost.
Silver investors who are frustrated by the rather uneventful market activity may have to endure a bit more displeasure. Short of a major development, the silver market is expected to be rather dull for the next few weeks, hence the term summer doldrums.
The close
Thursday’s Comex floor session ended with silver near the day’s low at $27.17. The New York spot market closed up $.35 at $27.53.
Silver bears still possess the technical advantage, with solid support remaining around the $26 level and solid resistance at $28.
Company News
Arian Silver (TSXV:AGQ,FWB:I3A) reported a dispute with the owner of the toll mill which was contracted for use at the San Jose mine in Mexico. As a result milling has been suspended. The company is attempting to resolve the dispute but reminds investors that the milling operation was only part of a pilot program to test for larger scale operations.
Liberty Silver (TSX:LSL,OTCBB:LBSV) has offered to obtain all of the outstanding common shares of Sennen Resources (TSXV:SN). According to Liberty Silver its offer valued at $13.36 million represents a 47.3 percent premium to the 20 day volume weighted trading price of $0.135. Liberty Silver estimates its acquisition of Sennen and its financial resources at the offer price is comparable to a private placement of its common shares at $.71.
Apogee Silver (TSXV:APE) has secured the necessary transportation and milling agreements and therefore commenced shipment of stockpiled mineralized material from its Pulacayo project in Bolivia to Tatasi for milling and processing.
The company has also completed the acquisition of the Cachinal silver property in Chile and has issued the remaining payment to Valencia Ventures.
Securities Disclosure: I, Michelle Smith, do not hold equity interest in any of the companies mentioned in this article.
