Why Did Silver Prices FALL Yesterday?
- Published on Sep 6, 2019
- Many subscribers have asked why did silver prices fall by over $1 yesterday in what many believe to be a bull market.
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Today is Friday 6th September 2019 and we are taking a brief look at why silver prices fell yesterday from $19.50 to $18.64 and today a further fall back to $18.30 as we write this video.
In last Saturday’s weekly update when silver was $18.37, we concluded with the following words on silver:
We would not necessarily be buyers at this level even though our last 2 videos have predicted higher prices before the end of 2019, but we do feel that buying has been a little over-extended, and are expecting some pullbacks certainly towards the $18 level and more than likely back towards $17.50 though there may be another 20 - 30 cents in the price before this happens.
Well, with the China outlook looking ever more bleak as the US refused to pull back or delay the sanctions which were imposed on 1st September, Iran beginning to raise its head again with more interaction on the High Seas and the pumpers en-masse began sending out emergency newsletters that $30, $50 and $100 silver was on the immediate horizon, we saw a sudden surge in the silver price after the Labor day holiday peaking at $19.65 on Wednesday.
Firstly, from a technical analysis point of view and as we stated on Saturday, even at $18.37 silver had ‘got ahead of itself’ and was due a pullback, so you can imagine what that meant when it hit $19.65. Now we admit, we did not expect silver to jump over a dollar but we did expect a 20 - 30 cent rise before the pullback occurs but it has now fallen back within the space we were expecting and was expecting it to fall even further.
Secondly there has been some good news re the China Trade talks in that it has been reported that they will resume again in October.
Thirdly the Hong Kong controversial extradition bill has been withdrawn and China has supported its withdrawal. So, whilst the problems are not over, a reduction in tensions is likely.
Fourthly the Brexit fiasco has potentially led to a Bill being passed which prevents the Government from choosing a ‘no deal’ Brexit. Now we see problems with this ourselves, but as far as markets are concerned, they view it as another potential removal of anxiety.
Fifthly robust U.S. data yesterday on jobs and services has assuaged fears of an imminent recession
Sixthly there has been suggestions from some European Central Bank policy makers that it’s not yet time for the ECB to start buying bonds again.
So, whereas at the beginning of the week, there was doom and gloom, now towards the end of the week, matters do not seem as bleak as originally anticipated - or at least for now.
Add to all of that a reasonable dollar index of 98.4 (though it has been over 99); the Dow rising by 374 points yesterday and the S&P rising by 1.3% plus all Asian pacific markets in positive territory and most European ones - the fear factor which our friends the pumpers have been revelling in lately are slowly perhaps not dissipating but not as imminent as they would wish you believe.
In July 164,000 new jobs were created and it is expected around 170,000 should be the magical figure for August and since there were strong ADP Employment figures published yesterday plus a rise in unit labour costs, it is expected that the Non-Farm Payrolls will be positive.
Now, if they are stronger than 170,000 by a good margin, we can expect to see gold and silver prices fall further, if they are weaker by a good margin they are likely to rise and if they are as expected, we still see a slight deterioration in prices but markets will remain cautious until the FEDs interest rate announcement due on 18th September. It’s generally anticipated that it will reduce rates by 25 basis points, but this may upset equity markets which are anticipating and have factored in a larger cut.
But that is for another day and another video. Meanwhile, keep your eyes peeled on the data and also Jerome Powell is speaking later today and so his comments are also worth listening to.