Silver Price: No Movement from the Federal Reserve

November 3, 2017

Notice anything big from the markets yesterday? Few did. A mixed day on Wall Street had some markets up and some down, with precious metals making no big leaps in either direction. That was the result of no movement from the Federal Reserve, which quietly held an FMOC meeting and stated that it would not raise interest rates. There is still some expectation that the Federal Reserve will raise them in December, but the market may have already “baked” that news into the pie of collective expectations.

For its part, silver remains in the lower range of $17 per troy ounce, which is where it has spent most of 2017. Impatient silver investors looking for something out of the Federal Reserve to push precious metals are clearly going to have to wait longer. Here’s why.

Federal Reserve Keeping Interest Rates Low for Now

With recent news—noted in this very spot—that President Trump is expected to name Jerome Powell to the Federal Reserve leadership position of chair, the market sees plenty of reason for optimism. Powell is expected to continue many of the policies the Fed has championed over recent years, most notably a slow uptick in interest rates even as the economy seems to improve. That’s good news for Wall Street, which tends to view the free flow of money as a good reason to buy up stocks, which in turn drives up equities prices.

Making even less news, however, was the recent announcement of the Fed that it would not raise interest rates. This minor blip on the screen of most news channels saw a mixed market reaction, but it could mean that stocks continue to rise at least until mid-December, when the Federal Reserve is expected to make another move upward.

The Federal Reserve and Silver’s Price

Confidence and strength in the U.S. dollar tends to keep the price of silver in check—the more confidence there is in the dollar, the less it costs to acquire silver. This keeps prices down. After a recent jump in prices, silver is back up to $17 per troy ounce, where it has enjoyed a sort of equilibrium over the past year. It’s been about a half a year since silver last went higher than that—and if the Federal Reserve continues current policy, there could be little reason to expect that trend to change in the next half year.

The Prospects of Silver in the Current Economic Environment

We’re heading into the holiday season, when sales and consumer activity will be at highs for the year. But low activity relative to the economic season can spell doom for the markets if they don’t live up to expectations. If they do, however, and new records are broken, it may put upward pressure on stocks again and downward pressure on metals. Combine that with a potential rate hike in December and silver investors may want to be on the lookout for a fresh dip in silver when investing more in the precious metal.  

Darren Capriotti

Darren Capriotti has been a market analyst for the past decade and is an expert in precious metals. He prides himself on his ability to analyze the market and offer true value to investors with questions about gold, silver, and other precious metals. Highly educated, incredibly passionate, and more accurate than most, Darren offers a true, unbiased look into what investors can expect in the precious metals market. You can reach Darren at dcapriotti@gold-eagle.com.

During 1500s the Spaniards had taken 16,000,000 kilograms of silver from Peru.

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