What’s Been Moving The Silver Price Recently?

Friday, October 21, 2016

silver bar

Silver enthusiasts saw silver flirting with prices in the $20 range earlier this year now have to face the fact that silver’s price has dropped markedly. But is this a temporary dip on a consistent rising in the prices, or is there more to the story? Looking at what’s happened to the price of silver recently may have some important answers.

Deutsche Bank Paying Up For Silver Price-Fixing Case

Deutsche Bank has been in the news a lot lately, and not all of it is good. Just this week, Deutsche Bank agreed to pay $38 million to settle an allegation in the U.S. of silver price fixing. CNBC.com writes that the settlement had been expected for some months.

But what was the price fixing case itself? An alleged conspiracy dating back to 1999 suppressed prices on silver, giving advantages to banks and not silver investors. Anyone who’s interested in the price of silver as an investment will certainly want to pay attention to this ongoing case, which is still not resolved. Deutsche Bank has agreed to cooperation with investigators against “non-settling defendants.”

Morgan Stanley Set To Join The Silver Price Process Of “Benchmarking”

With Deutsche Bank out of the London Silver Market Fixing Ltd group, Morgan Stanley is set to join the “electronic auction process” in setting benchmarks on silver, according to BullionDesk.com.

Investors should note that the daily-style benchmark is different from the 24-hour spot price, which many traders prefer. But bulky-style contracts tend to be handled on the daily benchmark for simplicity’s sake.

Where Are Silver Prices Going From Here?

When looking at the price of silver, it’s important to remember that individual banks, even banks the size of Deutsche Bank, don’t always have as much power as you might imagine. Even settled cases of alleged conspiracy might not make most investors’ radar. If you want to know where silver prices are headed, it’s important to get back to fundamentals.

Supply and demand are the two most obvious factors here. With many international banks threatening to go into negative interest rates, silver and gold alike remain strong contenders for rising investments thanks to the way people park their money into the precious metals. When banks no longer make it affordable to keep wealth with them, you can expect demand for precious metals to rise.

It’s also important to watch domestic monetary policy, as silver is closely tied to the strength of the U.S. dollar. A weakened U.S. dollar tends to mean higher prices for gold, and the same is often true with silver. Though the two precious metals are not necessarily linked, you’ll find that as a trend, they tend to follow each other, just as you might find to be the case with other investing asset classes.

For investors who have watched the silver price in recent weeks, the next few weeks stand to be just as interesting, if not more so. Stocks have been hovering for some time now, and if a correction should ever come, silver may be one of the few places to find any growth. As always, there are no guarantees.

Darren Capriotti

Darren Capriotti has been a market analyst for the past decade and is an expert in precious metals. He prides himself on his ability to analyze the market and offer true value to investors with questions about gold, silver, and other precious metals. Highly educated, incredibly passionate, and more accurate than most, Darren offers a true, unbiased look into what investors can expect in the precious metals market. You can reach Darren at dcapriotti@gold-eagle.com.