Silver Spot Prices Suggest Traders Are Treading With Caution

Silver spot prices made something of a rally this week despite the likelihood the US Federal Reserve will continue its stimulus program. The central bank´s monetary committee is scheduled to meet again next week (17 and 18 Dec), but that has not prevented wily traders taking advantage of silver trades at the first signs the US dollar felt a wobble.

Hopes remain high that the Fed will taper their quantitative easing program, especially given unemployment dropped to 7 per cent in November. 

However, the dollar has weakened again this week and the fiscal uncertainty may persuade the policy makers to continue the $85 billion stimulus program.

Late silver rally

Silver has been teetering below the $20 mark all week and despite a late rally on Friday that saw the white metal enjoy a three-week high of $20.47, spot prices settled at $19.50 at close of play.

The silver spurt is mainly due to technical buying and short-coverings in anticipation the Fed will taper its stimulus program. However, traders in New York appear to be divided between two camps and whilst some investment banks are hedging their bets with silver, the other half of Wall Street of putting their faith in the dollar.

According to analyst Thomas Stopler of Goldman Sachs, the price of Fed tapering has already been factored into the stocks and shares market which would make it difficult for the USD to regain strength in light of the healthy unemployment figures.

 Silver spots in the balance

Data coming off the Kitco charts suggest the recent gain for precious metals is a good indication that tapering will start sooner rather than later – but it is impossible to tell how many investors have taken a gamble based on the idea that tapering costs have already been taken into account in projected forecasts.

Spot silver prices are hanging in the balance. An overwhelming number of analysts are predicting silver prices will not increase for at least another year, but many expect the white metal to enjoy a boom, especially given demand is outweighing supply at the moment.

Mining companies have reported they are currently making a loss on precious metals given the low prices, which has subsequently forced them to reduce the amount of silver production. The industrial sector that rely on at least 45 per cent of the world´s mined silver have been struggling to obtain the parts and subsequently have had to delay launch of products.

The good news for collectors and small time-long-term investors is that silver price will remain at attractive prices long enough for you to take advantage of a weak market and get ready to cash in when spot prices rocket – by double the amount according to some speculators.

If you are interested in adding silver to your investment portfolio, or want to start your investment with silver coins or bullion, now is a great time to buy silver. For the latest silver prices visit today.