SILVER
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(COMMENTS BELOW ARE UPDATED AS OF THE U.S. CLOSE ON THURSDAY, NOVEMBER 12)
TECHNICAL FORECAST: Short term indicators still remain mostly negative.
Summary: Silver was lower today (Thursday), finding some resistance in this are and still not far from the lowest point in 3 weeks hit 2 weeks ago and still below last year's high near $20. The indicators are still tending to turn down after some minor improvement in the past week. - the silver price is influenced by the gold price which in turn is influenced by the U.S. Dollar. Click for recent activity December silver contract. Click here for 2 year chart. Click here for nighttime futures trading quote. Click here for 24 hour spot silver price (scroll down the page)
Silver is influenced by the gold price which in turn is influenced by the U.S. Dollar. The U.S. Dollar Index (DECEMBER contract) closed today (Thursday) at .7569. The U. S. Dollar Index is still well below the high of 92 hit in November 2005 and well below its all time record high in 2002 near 120.00). Click here for a longer term chart of the Dollar.
The short term indicators are tending toward negative. (Visit the gold page for more details.)
The precious metals prices have recently been influenced by the Crude Oil but now the silver appears to react more to the recent large moves in the stock market which could lead to a slower economy and reduced demand for precious metals.
There are some similarities to the gold and silver market in 1979 and 1980 when silver soared to around $50 an ounce. One major exception however is that U.S. interest rates were rising then as inflation hit double digits - that is not the case now as interest rates have been declining, not rising.
The latest Commitment of Traders report (as of November 3) shows that long speculators in the silver market outnumber the shorts by 5 to one, the long speculators accounting for 56% of the market versus 10% short.
Before the silver started to rise in the past few years, the average open interest was usually between 70,000 and 80,000 (compared to near 134 thousand now - as of yesterday).
Keeping your money safe:
The safest place to keep your money and get the near the highest interest rates (usually but not always) is in U.S. Treasury obligations. You can open your own account (minimum $100), free of any commissions or any other costs. To go directly to their site, click: TreasuryDirect (a U.S. government web site). You will find out everything you need to know. Interest income on U.S. Obligations are subject to Federal Income tax, but exempt from State or local income taxes.
Interest rates now (October, 2008) are near the lowest in history but are usually higher during less volatile times.
Silver Fundamentals - Supply and Demand:
For an easy picture of silver demand for the past 10 years (and other interesting information), click on the World Silver Institute, one of the premier industry sources (scroll down the page for more demand information). (There has been a very noticeable change in demand for photographic use due to the use of digital cameras.)
Following are supply and demand figures (in metric tons) for the past 7 years. Most notable is that demand is down over 67 (metric) tonnes in the past 7 years, while supply has risen.
| Global Silver Supply:* |
2000 |
2001 |
2002 |
2003 |
2004 | 2005 | 2006 | 2007 |
| Mine Production | 582.2 | 589.2 | 585.9 | 595.6 | 634.4 | 641.6 | 646.1 | 670.6 |
| Global Government Sales* | 78.1 | 87.2 | 71.3 | 82.6 | 61.7 | 68.0 | 77.7 | 42.3 |
| Old Silver Scrap | 179.2 | 182.7 | 184.9 | 191.6 | 181.1 | 187.3 | 188.0 | 181.6 |
| Total Supply | 839.5 | 859.1 | 842.1 | 869.8 | 877.2 | 896.9 | 911.8 | 894.5 |
| = | = | = | = | = | = | = | = | |
| Global Silver Demand:* |
2000 |
2001 |
2002 |
2003 | 2004 | 2005 | 2006 | 2007 |
| Industrial Applications | 377.1 | 338.1 | 342.4 | 351.2 | 367.1 | 409.3 | 430.0 | 455.3 |
| Photography | 219.5 | 213.9 | 205.3 | 196.1 | 181.0 | 164.8 | 145.8 | 128.3 |
| Jewelry & Silverware | 281.4 | 286.0 | 259.2 | 276.7 | 247.5 | 249.6 | 224.9 | 222.2 |
| Coins & Medals | 29.8 | 30.5 | 31.3 | 35.3 | 41.1 | 40.6 | 39.8 | 37.8 |
| Total Demand | 907.8 | 868.5 | 838.2 | 859.3 | 836.7 | 864.4 | 840.5 | 843.7 |
* Excludes producer hedging of future production (relatively minor); some figures may be rounded off.
As a indication of the public's interest in silver now, following are the figures published by the U.S. Mint showing the amount of silver coins sold by the U.S. Mint (in no. of ounces):
|
No. of Ounces | |
|
1997 |
3,636,000 |
| 1998 | 4,320,000 |
| 1999 | 9,008,500 |
| 2000 | 9,133,000 |
| 2001 | 8,827,500 |
| 2002 | 10,475,500 |
| 2003 | 9,153,500 |
| 2004 | 9,617,000 |
| 2005 | 8,405,000 |
| 2006 | 9,981,000 |
| 2007 | 9,887,000 |
| 2008 (thru September) | 13,427,500 |
(Average open interest in the past decade was mostly between 75,000 and 115,000 open contracts.
Click here for a long term look at
Silver (Monthly
Chart) (updated monthly) or click for
the Silver Weekly
Chart (updated weekly).
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*Nighttime quotes are delayed, usually 30 minutes.
* Commitment of Traders percentage figures rounded off.
** Open interest figures refer to the previous day's trading since they are not released by the exchange until the following day.
