Silver spot price falls while market awaits word from CCP’s Third Plenum

Beijing-China (Nov 12)  So far today, the spot price of silver has been under attack from short-sellers in a market unconvinced that the high-stake talk-fest in the PR of China will conclude with the much-awaited economic reforms. The People’s Republic plays a central role in commodity markets, accounting for much of the increase in global demand over the last decade.

The plenary meeting of the Chinese Communist Party ended today with a promise to give the markets a “decisive role” in the allocation of resources. A full report of the plenum is scheduled for publication in Beijing late this evening UTC and is expected to chart shifts across the spectrum of economic policy, including everything from financial sector liberalisation to the keenly awaited land reform.

The Third Plenum, so-called because it’s just the third plenary session of the Central Committee of the CCP, is being closely watched globally, with the four-day meeting expected to reveal the nation’s political and economic agenda for the next decade. Previous plenums concluded with the announcements of unprecedented reforms, as with the 1978 summit, following which then leader Deng Xiaoping declared an opening-up of the Chinese economy with major market-oriented policies.

That was a long time ago but the commodities markets are supposing that this time around the party leadership will reveal bold reforms for modernization at a time when the PRC’s economy is losing its mojo. China’s growth has all but halved from the high of more than 14 percent in 2007 to close to 7.6 percent this year.

The scheduled report is unlikely to disclose chapter and verse but that level of detail will be needed sooner rather than later, said chief UBS investment officer Yonghao Pu. “For markets, the question is no longer whether or not the government will carry out reform, but how fast and to what extent it will do so.“

According to Geoff Lewis, a global market strategist at J.P. Morgan Asset Management, “Detailed policies and measures may take time to unfold, so a post-plenum dip in precious metals could be a buying opportunity”.

The price of silver futures reached a 27-day low of 21.05 mid-way through today’s Asian session but the precious metal has since found support to be currently trading around 21.233, down 0.44 percent intraday.