Silver prices today were up marginally as the major indexes faltered, but still remain down on the week after positive economic news yesterday (Thursday).
The Dow Jones Industrial Average was down 0.7% by market's close today (Friday), while the S&P 500 and the Nasdaq Composite were both down about 0.5%.
Conversely, Comex silver for September delivery was up about 1.7% to $20.75, $0.34 above yesterday's close. New York spot silver, which dipped as low as $20.27 an ounce by 8 p.m. EDT last night also recovered and is trading up to $20.73 after yesterday's $20.36 close.
This was following a pretty significant 2.6% drop yesterday to a 5:15 p.m. closing price of $20.36, the lowest closing price in more than a month. This price dip came on encouraging economic news, as the U.S. Labor Department reported that weekly jobless claims for the week ending on July 19 were at their lowest level since February 2006.
Silver, along with other precious metals and commodities, generally falls on positive economic news. This is because when the economy is doing well, the stock market will rise and investors will put their money in equities. But when conditions worsen and threaten to pull down equity prices, or inflation expectations accelerate and threaten to weaken the dollar, investors look for precious metals as a store of value to hedge against negative economic factors.
Gold is the premier investment in the precious metals complex, but as money pours into the yellow metal, silver will see residual investment interest and get a bump. Because silver trades in much lower volume, the gains are more pronounced - as are the pullbacks.
But what's important to take away here is that silver's stalling price is no cause for alarm...
What's Behind Silver Price Movements
In the last two weeks, silver and gold have both begun to slide. This is not only a function of positive economic news, but a generally weak period of trading that tends to settle in over the summer. Additionally, silver had been nearing new three-month highs and traders were looking to cash in.
"Looks to me like more profit-taking and typical summer weakness and volatility, and silver is once again following gold's lead," said Money Morning Resource Specialist Peter Krauth. "So with gold down about $40 in the last 10 days, silver is tagging along, and is down about $1 over that same time."
He added that, "In the grand scheme, not a very big deal, as that's less than 5%."
On the week, silver is down about 0.8%, following last week's 2.6% drop. The iShares Silver Trust ETF (NYSE: SLV), a fund that is pegged to physical silver bullion in secure London and New York vaults owned by JPMorgan Chase & Co. (NYSE: JPM), is down 1.3% on the week.
With silver volume down and prices stalling, this may be a good time to start investing in silver, President and Chief Operating Officer (COO) of Asset Strategies International Richard Checkan told Money Morning. Checken expects "range-trading" over the summer for silver, before it starts to see bigger gains in the fall.
"For me when it stays kind of muted, then there's great opportunity where you don't have to rush in, but you can step in," Checkan said.
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