Silver as an investment

Market Report: Waiting for the Fed / BY ALASDAIR MACLEOD / DECEMBER 11, 2015

Change the title of Samuel Beckett’s play to substitute the Fed for Godot, and you have a fair description of the tedious market for precious metals this week.

After spiking up last Friday under the influence of bear-closing, gold and silver prices have done nothing but drift lower-to-sideways all week. That said, the market imparts a feeling of a firm undertone, with backwardations in physical markets, and an absence of selling in the futures, rather than any serious demand chasing prices.

The Fed will pronounce on Wednesday. The FOMC has all but said they will raise the Fed Funds Rate target by 0.25%, and that this increase will be the first of a gradual rising trend. The futures market has discounted this announcement, with the Managed Money category (i.e. hedge funds) net short for only the second time. Meanwhile, swap dealers (mainly bullion banks) are actually long. Unless this extreme position normalises, which would probably see the gold price recover to over $1100, it leaves open the opportunity for an obvious trade on the bull tack.


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