Silver Update for Jan 24, 2012

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Jan 24, 2012 07:30 PM EST – January Silver settled COMEX today at a price of $31.921, down $0.302 or just under 1%. Electronic trading in New York added another $0.13 to the price, finishing the session at $32.05 per ounce.

Price action in equities, as well as silver, was subdued as traders waited for the Fed FOMC statement on Wednesday, nervously eyed the impending Greek default talk in Europe and prepared for a key earnings announcement after hours. A “pullback” for the silver price was not unexpected today after a 5.7% gain over the prior two days. We added quotes because one can barely consider less than a 1% move, representing only 17% of the two-day gain, a pullback. One would normally expect even better entry points tomorrow as selling accelerates into a mini trough, perhaps at a 38% Fibonacci retracement of the breakout move (which would take the price down another $0.30 to $0.35), if not trading down to test the $30 breakout area altogether (real silver buyers wouldn’t wait for that).

However, all bets are off on trying to predict prices for tomorrow. Note the small pop in silver prices at the end of electronic silver trading in New York today. We did get that earnings announcement, with Apple revealing blowout top and bottom line results after the market closed. This propelled stock futures higher and perhaps carried silver prices with them. As Apple earnings dominate the headlines, one might almost forget that we were waiting to hear from the Fed tomorrow afternoon. This is where the financial press has its work cut out for it. If stocks continue to surge on the presumption that all is well, citing Apple earnings as the evidence, then how can the Fed justify easing further? What if everything rallies, regardless of what the Fed does? Can the Fed disappoint with no easing dialogue, if market participants decide easing isn’t even needed because all is well? Can the Fed spin it this way, getting higher equity prices, without having to ease further? We can already hear the argument: Everybody in the world is buying iPhones and iPads, so the markets are in a position to rally on fundamental growth, which is taking place. Who needs QE to keep pushing higher? The global economy can’t be that bad, can it? Can it? Hello?

Are those crickets chirping, or just the distinct ring one hears as silver bugs continue stacking physical. [Silver Update Archive]