Strong Jobs Push Silver Price Downward

Silver is having an incredibly rough day in the market today, and for good reason. The official non-farm payrolls report for the United States in the month of July was released. The overwhelmingly positive jobs report is leading to faith in economic growth in the United States. So, is silver destined to fall for the long run? Not likely! Today, we'll talk about the jobs report that was released, what it has to do with the price of silver, and why I maintain an overwhelmingly bullish opinion with regard to the price of the precious metal.

US Economic Growth Sends Silver Price Diving

As mentioned above, the price of silver is falling hard today as the result of a strong jobs report out of the United States. During the month of July, 255,000 jobs were added to the US economy. This was overwhelmingly positive. Not only did the figure beat analyst expectations of between 175,000 to 180,000 job additions, it far surpassed the key mark at 200,000 job additions.

What Does This Have To Do With The Price Of Silver

While it may seem as though US jobs growth and silver are two completely different topics, that's not the case at all. In fact, it couldn't be further from the truth. There are several ways that this has an affect on the value of silver...

• USD – Silver is priced using the USD. As a result, when the USD heads upward, silver becomes more expensive in nations outside of the United States. As a result, demand declines, leading to declines in the price of the metal. Because currencies are only as strong as the economies they represent, the strong US economic data is likely to send the USD upward. This will lead to reduction in demand for silver, and ultimately declines in its price.

• Safe Haven – Silver is considered to be a safe haven investment. This means that when economic conditions are poor, investors tend to look to the precious metal as a way to keep their assets safe. However, the strong economic conditions reported by the United States will likely lead to sales of silver as investors look to the market for profit.

• Interest Rates – For some time, the Federal Reserve has been planning to increase its interest rate. This would increase the value of the USD further, leading to further declines in the price of silver. With the strong jobs report, many believe that we're seeing a shift that will lead to a rate increase by the end of the year.

Why I Am Still Bullish On Silver

While the strong US jobs report is a bad thing for silver, I maintain an overwhelmingly bullish opinion with regard to the precious metal. The truth is that while the US jobs report is an important economic indicator, there are several other indicators that aren't very positive. In fact, the most important indicator, GDP was overwhelmingly negative for the first half of the year. This, in combination with global economic struggles that are continuing to deteriorate, will likely lead to further safe haven demand revolving around silver, and stronger growth. While we're seeing declining prices at the moment, I'm viewing this as an opportunity, not a loss!