December 11th Silver Market Update

Gold and silver spot values are moving downward by small margins this morning, but not enough to make any major impact in the gains accrued through Monday and Tuesday. As you can probably already tell, both gold and silver opened this week up in impressive fashion by adding unprecedented value in the face of a market that seemed to bearish to support a precious metals rally.

The real test came yesterday, when most investors and experts were expecting to see a harsh corrective pullback that would basically undo the gains made earlier in the week. To everyone’s surprise, however, yesterday did not bring about a major corrective pullback at all. While spot values did lose a bit of ground, the losses were mostly negligible and the day was considered a win. I suppose that the rest of today will really determine whether gold and silver can withstand some technical pressure.

Crude Oil Is This Week’s Hot Topic

For the past 4 or 5 months, crude oil has been making headlines due to its massive decline and current position, which is hovering near a 5-year low. For the better part of the past three weeks or so, investors and analysts alike were expecting crude oil to make a recovery bounce, but that bounce never came. As people continued to wonder why the price of oil continued to drop, someone finally did enough digging to find the answers.

Yesterday, it was made widely known that the current slump being experienced by crude oil is a resul of more US-supplied oil hitting the market. With demand for oil remaining mostly stagnant, and the supply growing by good margins, it is no surprise that the value of crude oil has dropped and has since remained in those lowly positions. In fact, is the US keeps up current levels of production, the value of crude oil very well might remain subdued for some time to come.

In addition to a larger supply driving down the price, crude oil from the US is more often than not cheaper than oil from foreign competitors because there is no additional cost added to the price of a barrel. You see, in dangerous, war-torn parts of the Middle East and Africa, the process of extracting, refining, and shipping crude oil is dangerous simply because of the rugged terrain and countless number of military groups who may or may not let shipments pass through the areas which they control. Because oil originating from the Gulf of Mexico or somewhere in West Texas is not subjected to these same logistical obstacles, the price, per barrel, is often significantly cheaper than its Middle Eastern and African counterparts.

It will be interesting to see, as the weeks pass, how crude oil affects gold and silver. Up until this week, oil had acted as a weight, dragging down the spot values of both gold and silver. This week, however, that all changed due to the fact that global economic worries have grown so much, that safe-haven demand is making an impact on the marketplace. With worries regarding the pace of economic growth in Asia and Europe abounding, I would not be surprised to see safe-haven demand for crude oil continue to rise.