Gold and silver prices continued to fluctuate in turbulent markets last week with no real clue as to which direction they are heading. This caused some brokers to cut their short-term expectations for the two precious metals, UBS downgraded their one month forecast for gold from $1,950 to $1,775 and the silver price was reduced to $32 from $46 an ounce. UBS was reported as saying its prior outlook was overly ambitious given the recent slowdown in market momentum. Goldman Sachs also cut its short term forecast for most asset classes.

Growing problems with European debt along with general market fears of a looming economic slowdown will continue to add volatility to the markets with many investors moving into cash. However much of that cash may well get channeled into ‘safe haven’ assets such as gold and silver over the short term.

Long term, many traders remain bullish for the two precious metals with many predicting gold to finish above $2,000 by the year end and above $40 for the silver price.
(read article)

Exchange traded funds (ETF’s) have grown in popularity by enabling retail investors to gain easy access to the world’s commodity markets – a trend that has been fuelled by the lack of confidence in traditional paper currencies such as the dollar.

Silver ETF’s have been particularly popular owing to the fact they cost less than gold ETF’s and therefore are more accessible to a greater range of investors. But many investors have felt the full force of the volatility of precious metals since the start of May as silver prices sank. Less than six weeks ago silver was trading at around $48 an ounce, today the price stands at just $36.2 an ounce, that’s a staggering drop of around 25%. Many analysts had predicted the correction in silver prices which had been sparked by the CME’s decision to raise margin requirements in an overheated market. The CME was quoted as been concerned at the level of speculation following a 180% rise in the silver price from the preceding nine months.

The sharp sell off in the silver market did also prompt selling in other commodities markets such as gold however the depth and liquidity of those markets is so much greater that the effects were less pronounced. Gold lost just over 5% in early May but has since recovered and currently trades at $1,542 an ounce.

However, despite the recent correction in the silver price, the long term trend remains bullish with many analysts expecting silver to comfortably return to over $40 an ounce by the end of the year.

Both gold and silver paused for breath this week as markets changed direction and the precious metals fell sharply. The main stimulus behind the decline was the recent margin rate hike by the CME for gold trading. Silver also suffered as a knock on effect of the changes and market sentiment soured. Chairman of the Fed, Bernanke also failed to commit to future plans for the next round of quantitative easing – however he also did not rule it out. The markets reacted negatively to the uncertainty and finished the week down.
Gold lost 5% on the week to finish at $1797/ t. Oz. The silver price tracked the gold price to finish at a slightly worse 5.45% lower on the week, however the weeks average levelled out at a healthy $41.34t oz or nearly 2% ahead of the previous week’s trading. Most the losses came mid-week with both gold and silver making up for some lost ground by Friday.
Many analysts attribute the losses to a short term correction in the prices for precious metals and remain bullish in their long term outlooks. While economic problems persist in the Euro-zone and America continues to battle its mountain of debt, investors will continue to turn to commodity based investments in order to hedge against devaluing paper currencies.

Exchange traded funds (ETF’s) have grown in popularity by enabling retail investors to gain easy access to the world’s commodity markets – a trend that has been fuelled by the lack of confidence in traditional paper currencies such as the dollar.

Silver ETF’s have been particularly popular owing to the fact they cost less than gold ETF’s and therefore are more accessible to a greater range of investors. But many investors have felt the full force of the volatility of precious metals since the start of May as silver prices sank. Less than six weeks ago silver was trading at around $48 an ounce, today the price stands at just $36.2 an ounce, that’s a staggering drop of around 25%. Many analysts had predicted the correction in silver prices which had been sparked by the CME’s decision to raise margin requirements in an overheated market. The CME was quoted as been concerned at the level of speculation following a 180% rise in the silver price from the preceding nine months.

The sharp sell off in the silver market did also prompt selling in other commodities markets such as gold however the depth and liquidity of those markets is so much greater that the effects were less pronounced. Gold lost just over 5% in early May but has since recovered and currently trades at $1,542 an ounce.

However, despite the recent correction in the silver price, the long term trend remains bullish with many analysts expecting silver to comfortably return to over $40 an ounce by the end of the year.

Following a sustained bull run from the start of this year, the price of silver faces a new test this week as the margin requirement was raised to ‘cool off’ speculative trading activity. Many fear a bubble is forming in the market causing, CME Group – the market’s parent, to step in and raise the margin to $16,200 per contract from $14,513.

As a result, the silver price fell sharply during Monday’s trading session opening nearly 10% down at $43.81 before ending the day at $44.63.

The price of silver has rocketed this year, mid-January the price has hovering around $28 before it’s meteoric rise to nearly $50 by the end of April – a rise of over 50%.  Silver has outperformed every other commodity this year leaving many to argue that the increase is unsustainable and a drop in the prices is inevitable. However with strong fundamentals and a devaluing dollar, further gains are clearly possible and only time will tell how far silver can climb.

The silver price rallied to set another new high as it gained $0.81, or 2.1% to settle at £39.30 late on Tuesday.  The price of silver has remained strong this year, having risen 27.0% for the year-to-date and it shows no signs of abating.
Hedge fund magnate Eric Sprott stated on CNBC that he remains very bullish on the price of silver. “Silver is going up because of savers,” the founder of Sprott Asset Management stated, “and people would rather own a hard asset than a paper asset.”
Relaxed monetary policy and quantitative easing have led to a lack of confidence in the fiat currencies amongst investors whilst gold and silver remained strong. When questioned if Sprott thought higher interest rates could dampen the price of silver and gold, he definitively stated that the rise in precious metals prices would not be driven by interest rates, but rather by a lack of trust in paper currencies.
Silver remains an important commodity both from a speculative and industrial perspective. As the global economy begins to recover its demand will surge yet supplies remain tight. Lastly, Sprott also commented that a “fear factor” is also helping to drive silver prices higher.
BMO Capital Markets supported Sprott’s positive silver price forecast in a recent research report. The firm stated that its analysis suggested that “silver demand & supply fundamentals should remain positive to the end of 2012E. Moreover, the prospects of further quantitative easing combined with ongoing sovereign debt concerns could result in investment demand for silver exceeding BMO Research’s supply projections through 2014E.”

It's official - the Perth Mint is out of 100 ounce silver bars and it's unlikely to get anymore stock in for 6 weeks.

King World News has verified with the Perth Mint that they have run out of 100 ounce silver bars and they are not slated to be available again until the end of March. As of the close Thursday, 100 ounce silver bars were still unavailable at ScotiaMocatta as well.

KWN also reached out to one of the largest dealers in Australia where Peter August of ABC Melbourne stated, “Pamp was just approached by an unnamed Swiss bank and solicited for their entire one kilo silver production ongoing. They said, “Because of the high demand, we’ll take everything you’ve got in one kilo silver bars ongoing.” Peter August went on to say, “We already have a month’s wait for the silver we are buying and it’s getting much harder to find.”

August also remarked, “Gold is starting to get a lot scarcer. Apparently at one point Hong Kong basically ran out of physical gold for sale two weeks ago. We were told that there was no physical gold available for sale in Hong Kong with no timeline given as to when more would be available. Mitsui ran out and the large dealers in Hong Kong were short of physical gold as well. Wether that was just a one time situation remains to be seen, but cracks are starting to appear in the physical market.”

Multiple sources around the world have been confirming tightness in the precious metals markets. So far the market has reacted with higher prices. Silver is within striking distance of multi-decade highs, it will be interesting to see how it trades the next couple of weeks.

The price of silver has fallen sharply since the start of the New Year. Prices rallied to peak of over $30.50 in the last week of 2010 before positive economic data from the US poured cold water on that optimism. The drop in price has been the largest two day decline since May and the slide has continued with the current price standing at around $28.69.
Two major factors have given rise to this drop; a reduction in the unemployment figures in the US and a strengthening dollar. The rise in the dollar against a basket of other currencies potentially fuelled a round of profit taking in the commodities markets after a long bull run. However concerns remain for the future of Europe and the US as their financial troubles will not disappear overnight. There remains a major concern over the solvency of some of the individual states within the US.
So the price of silver still looks promising despite a flush of recent positive data. Overall the world economic outlook remains gloomy with major debt concerns in western economies. An influx of capital into the Euro-zone from the central bank will only add to inflationary fears which in turn will drive investors to seek the safe haven of precious metals.

No doubt much of the media focuses on the recent rally in the gold price; however, the price of silver continues to shine putting on nearly 3% in the last week alone. Well, what’s driving these rising prices? Could it be the much talked about naked shorts that JPM has used to manipulate the market for so long are finally beginning to be unwound. Or perhaps, silver bulls are playing on historical data to argue that if the silver to gold ratio is to be maintained at 18-1, then we should see silver rising to around $80 an ounce. Further fuel has been added to the fire by the Fed’s Chairman, Ben Bernanke, hinting this week that plans maybe given the green light to increase POMO if necessary.  

Well whatever the reason is for the rise, the fundamental problem remains the same; physical silver is in short supply. Commodity exchanges may try to ‘cool’ the markets by increasing margin requirements however that can only work for so long before the market gets realigned. With silver now comfortably sitting at around $30 an ounce things are starting to look very bullish indeed. We may see silver pushed to new highs in the coming weeks and $40 by Christmas is looking like a distinct possibility.

On Wednesday, the Silver Institute reported that the U.S. American Eagle Silver Bullion coin program has already posted another record year.
As of November 24th, the U.S. Mint reported 32,505,000 silver bullion coins have been sold, well over last year's total of 28,766,500 silver bullion coins. Sales thus far in November are reported at 3,875,000 coins, up from 2,586,500 bullion coins sold during the entire month of November 2009.
"Should the current pace continue, sales will surpass 35 million coins by year's end," the Institute said.
U.S. Mint sales of American Eagle Silver Bullion coins have increased by 223% over the past five year, the Institute reported. The American Eagle Bullion coin program, the only one authorized by Congress, was launched in 1986 with the sale of both gold and silver bullion coins.
"While primarily purchased by investors, we expect to see continued growth in silver Eagle sales through the end of the year, especially with the holiday season approaching," said Silver Institute Executive Director Michael DiRienzo. "A leading silver bullion has repeated to us that they have seen a nearly 40% increase in silver bullion demand this year for producers ranging from 1-ounce call to 100-ounce bars."
The Royal Canadian Mint has reported an increase of 50% in silver Maple Leaf bullion coin sales over 2009 sales. Similar strong growth is anticipated for the Australian Perth Mint's silver Kookaburra bullion coin, and the silver Philharmonic bullion coin issued by the Australian Mint.
Source : Dorothy Kosich from mineweb.com

Many traders and private investors are very bullish on silver and perhaps they have every reason to be. There are huge short positions open with the major banks, CFTC records show 44.1% of the gross short positions in silver are held by the 4 largest traders. Many experienced traders, such as Ananthan Thangavel from Lakshmi Capital, are targeting $40-$50 within the next 4 months. If you look at the charts for silver you will see the gain in recent weeks silver has outshone its less media shy brother, Gold, by jumping 50% from around $18 to nearly $30 before backing off to around $27 today. This extraordinary rise may be partly due to short position covering.
However, the sentiment for being bullish on silver remains and it’s due to the fact that the world’s silver supply and mining production is not enough to satisfy the industrial and investment demands. The world produces around 600 million ounces of silver annually yet recent data suggests demand currently stands at around 950 million ounces for this year. Clearly there is a far larger outstanding position than could be currently mined this year.
So what has been holding the price back? Well recent comments by Bart Chilton as CFTC Commissioner have given weight to the argument that the price of silver was being manipulated. Large banks, such as JP Morgan have been criticised for holding large naked short positions to artificially suppress the price. Chilton stated that “there have been fraudulent efforts to persuade and deviously control” prices in the silver market, which “should be prosecuted.”
If these short positions are unwound we could face massive demand for silver that could see it rising to record levels and predictions of $50 an ounce may start to look conservative.