January 16th Silver Market Update

Gold and silver are trading lower for the third consecutive day this week thanks to stronger equity markets the world over. US stocks are hitting multi-year and month highs and are simultaneously putting a good amount of downward pressure on gold and silver spot values. As the overall strength of the worldwide economy improves, precious metals will be more frequently overlooked by investors who are seeking out riskier, more immediately profitable investments.

Even a disappointing report with regard to bank loans in China was not enough to derail the impressive day global equities had. In fact, even Chinese stocks improved amid the relatively disappointing report.

US Economic Data Quells Investor Fears

In case you missed it, last Friday’s non-farm payrolls data for last December came back well below market expectations. Compared to an expected payroll increase of around 200,000, the report showed that fewer than 75,000 payrolls were actually added. This weak report propelled gold and silver and most other raw commodities forward while at the same time put downward pressure on the USD. The weak employment report also did well to put a dent in overall investor confidence in the strength of the US economy.

Coming into this week, investors around the globe were concerned with whether or not the employment data was an indication of a weakening economy or if the data was simply a small glitch in what has been an otherwise positive recent run of US economic data. Shortly after the week began it became very clear that last Friday’s employment data was a unfavorable coincidence and in no way indicative of the US economy’s overall strength. Earnings reports from last year’s 4th quarter in conjunction with a positive monthly retail sales report reaffirmed investor confidence in the US, and global economies. We are just at the beginning of what is being labelled “earnings season”; a time when most major companies release their financial data from the previous year’s 4th quarter.

As of late and moving into the foreseeable future it is going to take a lot of fresh fundamental inputs in order for gold and silver to make any sort of extended bullish run. At present, investor confidence in global equities is growing which means that investors in Europe, Asia, and the Americas are going to be looking to take bigger risks in search of larger returns. All of this basically means that the assured, safe-haven qualities offered by precious metals are simply of little interest to investors in what is quickly becoming a flourishing global economy.

Posted in News

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