Silver Market Report 4/26/11

So everyone who has been investing in silver is probably scratching their head a bit today. Never fear though, there are several market forces at work right now that are temporary.

Today silver traded in a wild range of $4.00. Going up to near 50oz and back down to 46oz. Today there were also an amazing amount of contracts on silver, 90,000 more than gold. I haven’t ripped though the data totally yet but I can write it off regardless as non-normal activity playing around in the hype.

Here are the temporary forces pushing silver down. First, the Fed is having a meeting on Wednesday and they will come out and convince enough dummies that they have a handle on the dollar for a little bit, this could be for only a day or so if we are lucky. The rest of the world is looking at our political nightmare here and they are not going to buy that we will get our act together soon. In fact, its almost impossible for us to turn anything around soon because our housing and job markets suck.

Second, the Middle East and North Africa are going bananas and people are temporary taking some refuge in the dollar. However, the dollar is not sound fundamentally because of our debt to GPD ratio and unwillingness of our politicians to get anything done.

Third, we are testing an all time high and people get nervous going over it, so you will see prices flirting with both sides of the level for a bit. I think 50oz is a big psychological barrier and will take a little bit of time for people to accept.

Remember, markets never go strait up, they make an upward zigzag and we are in a zag. I hope it falls a bit more to be honest so I can buy in some more.

I am a fundamentals guys and I still know there are tons of precious metals hungry folks in emerging markets, a crappy dollar, a crappy congress, a crappy jobs market, a crappy housing market, and a Fed that loves to print money.

JS