After The Fed Cuts Rates, Where Are Silver Prices Headed?

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Mike Hammer | October 31, 2019 10:24am NYSE:SLV

NYSE:SLV | News, Ratings, and Charts

The Fed lowered interest rates yesterday and yet silver ended higher.  What’s up with that???


silver performance chart

(credit Fidelity.com)

Common logic says that when equities go up precious metals go down.  We did see silver (and gold) drop on the announcement.  But shortly thereafter the metals climbed off the floor and staged a strong comeback rally. Silver closed the New York day session higher than it opened, and looks to be continuing that strength this morning.

So, why? How come interest rates are dropping and silver is rising?

Your friendly Gold Enthusiast feels like he’s been harping on the reasons this market bull is about done and the “recovery” is about over.  So today we’ll just note that yesterday’s trading action shows there might be something to that reasoning.

After all, if “everything is OK” and investors had faith that the central banks can engineer a pure financial fix to current problems, there would be less need for precious metals, and they’d drop.

But we’re seeing the opposite.

Makes you think.  We hope.

We don’t think this is the end of the world or anything like that. And we don’t think there’s about to be a big crash. But things aren’t all rosy, and if you haven’t already we suggest you consider at least a small amount of your portfolio should be in protective things like precious metals. If you are leveraged or using margin, now might be a good time to roll some of that back.  Taking a part of any big profit positions now might not be a bad idea either. Never a bad idea to have some capital available for any bargains you see.

Signed,

The Gold Enthusiast

DISCLAIMER: The author holds no position in any mentioned security.  The author is long the silver sector via small positions in USLV, PAAS and SVBL. He may daytrade around these positions but has no intentions of trading out of these core positions in the next 48 hours.


The iShares Silver Trust (SLV) was trading at $16.96 per share on Thursday morning, up $0.23 (+1.37%). Year-to-date, SLV has gained 6.07%, versus a 14.02% rise in the benchmark S&P 500 index during the same period.

SLV currently has an ETF Daily News SMART Grade of C (Neutral), and is ranked #9 of 33 ETFs in the Precious Metals ETFs category.


About the Author: Mike Hammer

Mike HammerFor 30-plus years, Mike Hammer has been an ardent follower, and often-times trader, of gold and silver. With his own money, he began trading in ‘86 and has seen the market at its highest highs and lowest lows, which includes the Black Monday Crash in ‘87, the Crash of ‘08, and the Flash Crash of 2010. Throughout all of this, he’s been on the great side of winning, and sometimes, the hard side of losing. For the past eight years, he’s mentored others about the fine art of trading stocks and ETFs at the Adam Mesh Trading Group.


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