Silver bullion prices are testing resistance levels and poised to test the October highs near 17.46. Prices broke down in late November and early December as the markets began to price in a stronger dollar ahead of the Federal Reserve policy meeting. Now that traders have been able to absorb the latest meeting minutes and are privy to the most recent jobs report, prices will likely begin to move higher during the Q1 of 2018, and should start to accelerate now.
A Strong Euro is Good for Silver Prices
What helps silver coins and gold bars climb is a relatively weak dollar compared to the Euro and the Pound. European yields have been started climb given stronger than expected manufacturing survey reports and robust jobs data. The only caveat has been weaker than anticipated inflation which exists both in Europe and the United States. While the U.S. has started the interest rate normalization process, Europe has not, and many ECB central bank governors, believe its time to end the accommodative period. The EUR/USD is breaking out, which is a sign that silver coin prices are ready to begin to accelerate higher. Adding silver coins or gold bars to your portfolio now can set you up for positive returns in 2018.
The chart of silver versus the Euro shows that the currency pair and silver prices generally move in tandem. In July of 2017, the Euro began to accelerate higher, leaving silver in its wake. Now, as the Euro begins to break out to Fresh multi-year highs, as the ECB begins to slow accommodation, silver prices are poised to have performance that will catch up to the performance of the currency pair.
The data released during the past week which includes the U.S. payroll report, shows that December data was slightly weaker than expected, and might keep the Fed on the sidelines when it next meets in March.
On Friday the Labor Department reported that U.S. nonfarm payrolls rose 148k in December, missing estimates that payrolls would rise by 190K. Expectations were boosted higher at the last minute following the stronger than expected private payroll report released by ADP/Markit on Thursday. November’s payroll number where revised higher to 252k from 228K. The BLS also reported that the unemployment rate was steady at 4.1%. The labor force edged up 64k while the labor force participation rate steady at 62.7%. The most import piece of news that could be considered bearish for rates is wages, as it relates to inflation. While wages edged higher by 0.3% versus 0.1% previously they were in line with expectation which might keep the fed on a steady pace and allow sliver prices to accelerated further as the Euro moves higher.
Following the weaker than expected payroll report, Fed fund futures which track the changes that the Federal Reserve will change monetary policy now imply about a 75% chance for a March interest rate tightening. The market shows a second hike in September, and is at about a 50%, while a third tightening by year-end has about a 25% probability.
January is generally a good month for silver and gold prices and make an excellent choice as an investment relative to stocks and bonds during January. While growth in the U.S. is accelerating, its slowing relative to the pace seen in Europe. If European growth accelerates faster than the U.S., European yields will rise driving the Euro higher relative to the dollar, which will pave the way for higher gold and silver prices. If you are bullish silver and gold, now is the time to call Treasure Coast Bullion and ask for your free investment kit.
Good Investing,
Treasure Coast Bullion Group ("TCBG")
Read more by Treasure Coast Bullion Group, Inc - Staff Writer
