Start the conversation
Silver prices this month may run into trouble.
This is after a short-lived November boost.
Silver spot prices were up $0.37 an ounce last month. This was good for a 2.3% gain to $16.54 going into the Thanksgiving weekend.
This morning (Monday), those gains were all but erased before shooting back up, highlighting just how volatile silver has been. Silver prices had dipped below their October close of $16.175 an ounce before heading back up to above $16.40.
November's gains are still a good sign, despite these violent price moves to start December.
Commodities are falling across the board. Just look at crude oil.
Silver's no exception as sentiment is almost unreasonably bearish on the white metal. It's a welcome change for silver to turn in at least one productive month.
Silver's 2.3% November gain comes after the following tallies in the four months prior:
- -4.7% for July
- -12.8% for August
- -4.5% for September
- -2.8% for October
In this span, silver prices fell almost 23%, from $20.96 at the end of June. That makes even a slight gain (and even this morning's slight decline) a much more welcome change.
Silver is always a good investment. It is a good portfolio hedge, and will get a boost from market panic as the top stocks take a hit.
But silver prices could continue to see downward pressure. December is likely to produce a lot of headwinds that will keep a lid on any substantial gains.
Money Morning Resource Specialist Peter Krauth said $12 silver is not a stretch.
Here's what will be affecting silver prices in December:
Silver Prices in December Face Historically High Bearish Sentiment
Speculators are holding a lot of silver short right now. The total: about 225 million ounces. While not at the 260 million ounce record touched in October, the numbers are still historic. This puts selling pressure on silver. At these levels, silver will not be able to break out of this sell-side sentiment and rally. The good news: speculators have shed almost 33 million ounces since its peak. This could signal a massive short covering, which would boost prices considerably either to end 2014, or beginning next year.