Silver prices took a nosedive yesterday opening the floodgates for consumers to invest in bullion at under $20 an ounce. The white metal ended the day with a 1.28% loss following Vladimir Putin’s call for pro-Russia activists and Ukraine military to call a truce.
Trading started the day flat in Asia as concerns over the Ukraine crisis continue despite diplomats looking to resolve the geopolitical conflict in Eastern Europe amicably. Putin has asked that the referendum originally planned for this coming Sunday to be postponed whilst US officials are calling for it to be cancelled altogether. It will take place, but a date has not yet been confirmed.
Traders were convinced enough by Putin to sell-off their precious metals and send silver prices crashing below the $20 mark, prompting a potentially prime time for consumers to add the white metal to your investment portfolio at attractive prices. All being well, the value of silver will continue to fall throughout May giving you plenty of opportunities to snap up some bullion bargains.
US Fed winding down QE
Federal Reserve chair, Janet Yellen, also aided the downtrend of silver during her address to Congress yesterday. Head poncho of the US central bank sounded upbeat about the recovery of the US economy despite indicating monetary policies are in place to support the recovery.
The slow growth is a lingering concern for traders, but the Fed seem intent on tapering their stimulus program which looks set to end in autumn, a policy which will favour US-backed equities to the detriment of precious metals – good news for consumers looking to invest in silver.
However, there was also the suggestion that the weaker than preferred economy would mean the Fed will most likely refrain from raising interest rates in the first quarter of 2015, which will prop precious metal prices up for longer.
Yellen also raised concerns that emerging markets could threaten the global economy, and with Chinese manufacturing delivering disappointing results for a fourth consecutive month in April, traders are dipping into the Asian market with caution. Early trading in the Far East this morning was flat.
Silver in bearish mood
Technical indicators suggest silver will suffer further falls before the week is through and may test the $19 strong point. Whether precious metal prices will be further affected by geopolitical tensions in Ukraine remains to be seen, but if further military action can be diverted, expect silver prices to fall further.
Silver is an attractive commodity for a small investment as the metal is not expensive to purchase per ounce and prices have the potential to more than double their current value over the long-term – or when the stock market crashes. Considering the irreversible level of debt an economic collapse is inevitable.
Precious metals however, particularly silver and its gold sibling always perform well in times of financial stress, thus silver is a sound investment for anyone wanting to secure their financial future. You will need to purchase reasonable amounts, but given prices are forecast to hover between $18 and $19 an ounce for the majority of 2014, this is a great time for investors to stock up on silver bullion products.