Silver Prices Pop After Recent Fed Statement

| December 13, 2019

silverAfter last week’s outstanding employment figures, investors expected a fairly dull FOMC release yesterday. After all, what more is there to say other than “gee, things seem to be going well, so we’re going to wait for a while before we do anything.”

And that’s what we got.  The FOMC statement said current monetary policy is “appropriate” (strong language there, haha), and don’t expect any interest rate cuts in 2020.

So why did silver (and gold) go up following these remarks?

SLV Chart

The most probable reason is that investors don’t quite believe the “everything is just fine” tone of the remarks. There is more uncertainty in the world economy than US employment numbers would indicate, as shown by this morning’s very unexpected pop in jobless claims. So investors are probably showing their concern by remembering that gold and silver – traditional stores of value through uncertain times – are low right now, just came off a decent earnings season, and buying strength at low prices is usually a good idea.

We would say “key Warren Buffett soundtrack” here, but Buffett is famously against gold, silver and other historical stores of value.  Aaah well, everyone has to have a flaw.

Your friendly Gold Enthusiast expects this pop in silver is likely very short-lived, so don’t worry if you didn’t load up two days ago.  You’ll get your chance later on.  But if you see precious metals drop back to their recent support, you might consider a small buy if you have some spare cash.

Signed,

The Gold Enthusiast

DISCLAIMER: The author holds no position in any mentioned security.  The author is long the silver sector via small positions in USLV, PAAS and SVBL. He may daytrade around these positions but has no intention of trading out of these core positions in the next 48 hours.

Note: This article originally appeared at The Gold Enthusiast on December 12, 2019.

 

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Category: Commodities

About the Author ()

Mike Hammer has had a wide-ranging career, with trading and investing as a continuing theme. Mike graduated from UC Berkeley with a business degree, then worked with Macy's in their operations arm. He left Macy's and spent a summer trading his own account, which taught him a lot about trading in general and markets in particular. Trading through the Black Monday and the Crash of 1987 showed him how most people are unprepared for upheavals in their trading. He then joined Waddell & Reed as a financial advisor, helping regular people understand their finances and meet their life goals. Then came the usual story - Mike met and married the lady of his dreams. They moved to upstate New York, where Mike worked first for a small manufacturing consulting company, then Cornell University. While loving the work and the higher-education atmosphere, Mike missed the world of finance. Eventually, he signed up for stock trading coaching with the Adam Mesh Trading Group, to learn from people who understood modern markets. Within a year, Adam asked Mike to become a stock trading coach. Since then, Mike has trained over 200 individuals, spoke at several national conventions, and is a frequent contributor to conference calls across the Adam Mesh community. Mike writes The Gold Enthusiast daily newsletter, runs the Golden Hammer trading service, and participates in the Mesh Private Portfolio. He also keeps a position in international education which keep him in touch with "the student mindset". Mike closely follows the gold, energy, and financial sectors. His motto is "Plan your trade, then trade your plan!"

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