Silver finished floor trading at a price of $30.514, up $0.408 or nearly 1.4% for an impressive break above the $30 level, as well as last week’s closing high. Electronic silver trading in New York only added an additional penny to the price.
Behind the rising silver price today was a lower dollar and an ongoing rally in equities. Markets shrugged off less than exciting early economic numbers in the U.S. and an Egan Jones downgrade for Germany, yet embraced positive numbers out of the National Association of Home Builders. That is what momentum will do for you.
It was a quick consolidation, if this was indeed a break higher. Are silver and equities truly breaking out? We haven’t seen the kind of volume that you would normally expect in a rally like this. Where’s the conviction? The tone in the blogosphere regarding the equity rally is that this rally may be real and could have legs. Bears are beginning to go silent. That is your first warning sign actually. Short interest continues to decline. That is your second warning sign. Traditionally, the problem with being short right now is that retail is decidedly not long, with equity mutual fund outflows showing no signs of letting up. This time around however, Retail may have no funds left to buy shares at higher prices from institutions.
Those participating in silver via Sprott’s Physical Silver Trust may have been left wondering why they didn’t get a piece of today’s action. We published the answer in a blog post today: Why PSLV is Down Nearly 10%: Sprott Premium Teaches Lesson. In the grand scheme of things, we would suggest that a 10% drop in the price of silver doesn’t mean much. That may not comfort those holding PSLV, which as of this update, still has a 9% Premium to NAV. Fund buyers will now be watching premiums more closely.
For the current silver update, visit PMBull’s Current Silver Price page.