Where Silver Prices Are Trading Today – and What's Next

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Silver prices today continue to wander aimlessly around the $20-an-ounce level as the white metal is buffeted by many of the same factors restraining the gold price. This drifting comes after a dramatic drop of 35% in the first half 2013.

As with gold, much of the drop is due to fears that the U.S. Federal Reserve will begin "tapering" purchases of bonds from its current $85 billion-a-month level. If this comes to pass, the financial markets currently believe this will reduce excess liquidity and therefore any possible inflationary fires.

Here's what investors watching today's silver price have to understand…

There are other factors at play in the silver market, of course, besides the Fed. In fact, most of these factors point to an upswing in silver prices going forward.

Here are a few reasons to bet on higher silver prices in 2013.

Silver Prices and Physical Demand

As with gold, there's strong global demand for the physical metal itself.

Just look at the sales of the U.S. Mint's 1 oz. American Silver Eagle coins. The Mint reported that, during the first half of this year, it sold 25 million Eagle coins, an increase of nearly 44% from 2012. In the first half of last year, the Mint sold about 17.3 million of the 1 oz. coins.

The trend continued in July with the Mint reporting sales of 4,406,500 ounces of Silver Eagle coins. That is up from June's 3,275,000 ounces and May's 2,278,000 ounces.

It looks as if the Mint is well on its way to a record year for sales of the Silver Eagles.

JPMorgan's Bet on Silver Prices

Next we turn to JPMorgan Chase (NYSE: JPM), the custodian of the iShares Silver Trust (NYSE: SLV), the largest silver exchange-traded fund.

The Wall Street bank is infamous among silver investors for the huge amount of shorts it has had in the marketplace for years. The bank was even sued with a lawsuit claiming it was manipulating the silver market. But the lawsuit failed.

Nevertheless, it is always interesting to see what JPM is up to in the silver market…

Join the conversation. Click here to jump to comments…

  1. fallingman | August 12, 2013

    Thanks Tony. The focus on JPM is welcome and way overdue.

    If silver were a radio station, it'd be "All JPM, all the time." They have effective control of the market. The fact that they've trimmed their short positions on the Crimex and are laying in tons of the real thing is the big story. (The only other big player that matters at all is Scotia Mocatta … Bank of Nova Scotia).

    As many times as the criminally controlled SLV has been offered by others as a way to hold "silver," you done a service by highlighting SIVR and the Sprott fund.

  2. buddy | August 12, 2013

    So then, They have stopped selling siver futures and they are not still short 75000 silver contracts and long 35000 gold contracts.
    They are not planning maybe to knock silver down one more time onpaper to 5 dollars or 9.19
    so they can buy silver physical and buy some more gold on the way down also.
    And even if this is wrng and we only go up from her . Silver at 60 , what about 500
    They ain`t got no silver!! Unless they take it out of hiding. So what really is going on
    we little people want to know.

  3. Thomas Talache | August 12, 2013

    I made the biggest mistake investing in silver through Lear Capital. I bought $10K worth of silver half dollar coins in October 2012. They charged me a premium price of over $16.00 per coin. Yeah, I was new to buying silver and boy have I learned an important lesson. Found out from Rocky Mountain Coin located here in Denver that the selling price for the coins I purchased from Lear Capital was $12.00 per coin.

    Today, 10 months later, their buy back price is only $8.20 per coin. Wow, my silver coins lost half it's value. Yet to hear Lear Capital commercials on television, you won't hear the truth. Totally misleading. Buyers beware of Lear Capital. You have a better chance taking your money to a casino than dealing with Lear Capital.

  4. JohnPeebles | August 13, 2013

    Second that on too high commissions. Some outfits are charging 50% premiums or more on what they call "choice" and "brilliant uncirculated–BU–" coins that are cheaper bought elsewhere.

    These outfits run boiler room-style high pressure sales tactics to generate sales. Their missionary zeal is worthy though and does bring new investors into the rewarding field of numismatics.

    They tend to sell coins that haven't been graded, so you're taking a big chance. They offer a 30-day return policy, but that's little consolation unless you can get the coins professionally graded, which is a one way process wherein they get "slabbed" into plastic holders.

    It's important to note that coins can be graded only by impartial professionals and the salespeople aren't qualified to assess ratings!

    Coins that were sold to me as choice ended up graded between AU50 and MS62. The AU ratings aren't Brilliant Uncirculated (BU), though they can look as good. To get coins slabbed will take membership in a coin group like PCGS or NGC, and add fees on a per coin basis, which discourages wholesale grading of the lower value coins.

    I don't see the risk as worth it, especially if the coins are expensive. Better to see them–in person or online–first.

    One hint that commissions might be too high is the salesperson's willingness to come down in price, sometimes a lot. Ever been to a street market in Asia? Well, the prices they ask aren't the prices they're willing to take.

    Volume discounts might make these dealers give a somewhat better deal. They might also have large quantities of surplus coins or commemorative sets that they're willing to sharply discount. Then again, they're discounting to those people who've overpaid, so they're actually just sharing the commission with you.

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