October 17th Weekly Silver Market Update

Gold and silver experienced a huge upswing in value on Thursday, barely a day after the US Congress was able to draft solution to both the budget issue and the debt ceiling. With a rapidly declining US Dollar and stock markets dwindling as well, the economic atmosphere is perfect for gold and silver to make gains thanks to safe-haven demand.

Additionally, investors and market watchers are more quickly beginning to realize that the deals made in regards to the debt ceiling and the budget are temporary, meaning we could be dealing with another budget fiasco only a few months down the road.

Where Do We Go From Here

When October began, so too did the partial US government shutdown which lasted 16 days and was finally put to rest yesterday. Admittedly, the shutdown lasted much longer than most people anticipated, and in the final few days it was beginning to look like the shutdown and the debt ceiling being reached were going to collide head on. While precious metals were hoping for such a collision as it likely would have proved positive for precious meals, yesterday saw Congress patch together budget and debt ceiling bills which helped the US avoid a downgrading of their credit while simultaneously avoiding worldwide economic chaos which was expected to ensue at any time.

While the initial result of the government shutdown saw precious metals decline in value, the solutions pieced together by Congress did nothing other than push spot values forward. The reason gold and silver are doing so well in the wake of the budget and debt ceiling solutions can be attributed to the nature of the agreement, in that they are only temporary. The budget resolution only covers government operations until the middle of January while the debt ceiling solution sees the US able to borrow funds up until the beginning of February. This means, a few months down the road, we stand a real possibility of repeating the very same fiasco which we have been a part of since the beginning of October. Now it comes time to play the waiting game, a game precious metals investors are all too familiar with.

Posted in News

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