Silver Prices Back in the Green Today after Volatile Morning
New York (Dec 31) ilver prices are rebounding right now after a crazy morning. Silver briefly dove beneath $19/oz around 9 AM, but has recovered and is higher before the metal dropped. Silver is currently trading at $19.73, a 0.6% gain on the day. Despite what silver does today, it has not been a good year for the metal. Silver is on track for a 35% loss for 2013 and it would be the largest yearly drop since 1981.
Tapering fears were realized in December. The Fed finally decided to go ahead and start tapering by $10 billion. Now, we wait to see how often the Fed tapers moving forward. The Fed’s decision to taper has led to another reason to feel bearish on gold and silver. An improving economy.
The economy has seen very sluggish growth this year, but that growth is starting to pick up. The Fed’s decision to taper shows their confidence in the labor market and other aspects of the economy in the future. As long as the economy continues to improve, there’s little reason to buy gold and silver. Investors will be looking for any hiccups in the labor market or consumer spending as possible entry points for gold and silver.
For now, silver and gold are trying to hold their ground since the Fed announced the taper. They are largely succeeding. Besides the big dip the day after the taper, they have been trading flat to slightly higher since.
The state of the economic recovery is probably the biggest fundamental moving precious metals in the future. Strong growth will lessen demand. Economic stumbles will increase uncertainty and lead to more demand for a safe haven trade. We will see what 2014 brings.