Silver continues its seven day climb

Silver prices continue to climb as investors focus on U.S. economic data reports to determine whether or not the U.S. Federal Reserve will begin its tapering process later this year.

For the past seven consecutive days investors have pushed silver ( SLV , quote ) higher as renewed speculation that the Fed will not begin its tapering of its $85 billion per month asset purchases.  In fact investors have pushed prices back to the June highs.

Silver's Achilles heel is an improvement in the U.S. economy that in turn reinforces the view of the Federal Reserve's need to taper its asset purchases in the coming months but for the past seven days the silver market is pricing in no such tapering move.

Even though silver has been moving higher these past seven sessions on the year silver remains some 27% lower on concern that the Federal Reserve's plan to taper its asset buying.   What we are seeing is shift in thinking now as market participants attempt to digest U.S. economic reports and determine whether or U.S. can begin to stand on its own and in the past seven days thinking seems to be shifting.

Market participants are now shifting focus to the Core CPI and Unemployment Claims Reports due out at 8:30 a.m. EDT today and tomorrow's all important Building Permits and Housing Starts Reports.  We also will get glimpse into August non-Farm Payroll report with the release of the Preliminary non-Farm Productivity report followed by the Preliminary Consumer Sentiment.

Bottom Line:   depending on which camp you are in (To Taper or Not To Taper) silver is an option to play the Fed decision. Using in the money options is great way to take advantage of a directional move by defining your risk.

(Courtesy of Emerging Money)