Summer Doldrums Leave Silver Range Bound

Summer Doldrums Leave Silver Range Bound

Confidence from Friday’s better-than-expected US jobs report was apparent in the markets on Monday. Outside forces, such as strength in equities and gains in gold, also could have brought strength to silver, but instead the white metal got off to a weak start. Silver only managed to gain eight cents on the first day of trading, closing on the New York spot market at $27.88. As the week progressed, silver rose above $28 and posted successive closes above that level, but through Thursday, none was above last week’s high of $28.33.

Last week’s Commitments of Traders (COT) report reveals the strongest build in net speculative length since February, with 911.4 tonnes added. Though 625.8 tonnes were also unwound from the short side, short positions are still twice the five-year average. It is important to note that this report only covers action through July 31, before the results of the Federal Reserve and European Central Bank (ECB) meetings were known.

Standard Bank said the little confidence that was forming in the market will most likely be destroyed by last week’s disappointment regarding the Fed and ECB. The COT’s August 10 report should tell that story.

ETF investors continued buying silver last week, adding 145.6 tonnes to their holdings.

Investors may also be interested to know that recently there have been some very active days at the COMEX depositories. Between Friday and Monday, for example, some 3.31 million ounces of silver were received and 4.3 million ounces of the metal were shipped out. The reason for this activity is unknown, but movements of this volume are not considered normal.

This week lacked any real market-moving news to push silver prices around. It also lacked significant investment activity. Some deny that the summer doldrums exist, but volumes are extremely light, or as one market participant put it, the volumes are like vapor. These conditions are largely expected to persist through to the end of summer.

There was, however, some strength in the silver market in India this week. The wedding season is approaching in September and some expect that those festivities may provide support for silver over the next few months. Investors will have to wait and see.

For this week, the market continued to be choppy, range-bound, and generally uneventful.

The close

September silver on the COMEX closed floor trading at $28.09. Silver’s closing New York spot price was $28.14, up $0.10.

Silver faces solid technical resistance at last month’s high of $28.44 and solid support at the June low of $26.10.

Silver mining stocks were mostly in positive territory when the New York spot market closed.

Company news

Endeavour Silver (NYSE:EXK,TSX:EDR) signed a memorandum of understanding for an option and joint venture with La Sociedad Quimica Minera de Chile (SQM) to earn a 75 percent interest in the El Inca silver-gold properties in Northern Chile.

Hecla Mining (NYSE:HL) terminated its offer for US Silver (TSX:USA) after the company’s shareholders voted to merge with RX Gold & Silver (OTC Pink:RXEXF,TSXV:RXE).

Junior mining news

White Tiger Mining (TSXV:WTC) concluded an exploration agreement with the Aroland First Nation and the Animbiigoo Zaagi’igan Anishinaabek First Nation (AZA) in connection with the company’s Marshall Lake copper-silver-gold exploration project in Ontario. The agreement will cover the entire mineral exploration phase, the company said. White Tiger has agreed to provide financial payments, employment, service-related opportunities, and other benefits while AZA and Aroland will support the exploration project.

 

Securities Disclosure: I, Michelle Smith, do not hold equity interests in any of the companies mentioned in this article.