Will Silver Dictate Precious Metal Prices in July?

There is a murmur on Wall Street that silver will take over from gold as the new driver for precious metals in July. Silver usually follows her more reputable sister in the price charts, but with a consistently strong performance throughout June, some analysts are predicted silver will dictate prices this month.

Technical data certainly indicates it should. For the last week gold has been even more volatile than usual. Traders in the Far East are selling gold in huge quantities whilst Wall Street traders are using precious metals as insurance against riskier investment.

And dollar-backed assets do not appear too strong at the moment. Following Janet Yellen’s comments with regards interest rates following the latest FOMC meeting, traders have lost confidence in the strength of the US market and are turning to the safe haven of precious metals.

Silvers recent surge broke the psychological technical barrier of $20 and is well up on its three-year bear trend line and is looking bullish. Historically, these patterns are an indication that technical investors are returning to the market which will swing precious metal upwards.

Silver safer than gold

However, gold is experiencing a major crisis in the Asian market. Last week the National Audit Office in China discovered $15.2bn of gold-backed assets were fraudulent and ever since the value of gold has plummeted.

As a result, silver has become the go-to insurance and has kept a strong upward trend since the end of May. As a result of increased silver prices, mines will be encouraged to recommence their exploration programs which ceased over the past year due to low-to-negative margins per ounce.

Analysts believe the demand for silver is likely to increase throughout July as faith in the gold market. The Asian market has been rocked and despite the World Gold Council announcing the scandal will not affect gold prices worldwide, the ripple will surely be felt throughout the market.

Dissolution of silver fix

Furthermore, the dissolution of the London silver fix will support the white metal into the run-up of suitable replacements. There are currently seven organisations being considered by the London Bullion Market Association (LBMA) to regulate the new system and they will all be looking to strengthen their silver reserves to support their position.

An announcement is expected in early July which will give the new regulators a little over a month before the 117-year old tradition is handed over from the committee of leading banks to a private financial institute. The provider will develop the mechanism with assistance from the LBMA.

It is thought the introduction of independent regulators will also spark calls for the London gold fix to be handed over to the new solution providers as well, particularly as traders around the world have been suspicious of activity in the UK-based banks for years.

Silver prices then are expected to extend their gains throughout July and should hold a strong position around the $21 an ounce price point. Silver is currently valued at $20.80 per ounce so head over to coininvest.com now before prices go higher.