Silver posts strong 2012 so far; will it continue?

Commodities put in a strong January performance, but few markets earned as much as silver did in the first month of 2012, gaining 20% during the period.

That put silver in second place for the strongest commodity futures markets, beaten only by orange juice.

As February dawns, silver continues to build on its gains, but it is hitting some resistance as it targets the $34 an ounce level. On Wednesday, March silver futures on the Comex division of the New York Mercantile Exchange settled at $33.837 an ounce.

Silver has been on a solid uptrend since hitting a low of Dec. 29 of $26.1450 for the March contract.

Adrian Day, president, Adrian Day Asset Management, said much of the reason why silver rallied so much in January was because it had fallen so much during December. On Nov. 30 March silver settled at $32.804 and on Dec. 30 it closed at $27.915, a 15% swoon in one month alone. Silver wasn’t alone in its December descent, many other markets including gold and other commodities tanked in December. Likewise, many commodities rose last month.

Day said silver’s trip under $30 may have enticed bargain hunters who were able to pick up the metal at prices not seen since late September.

January witnessed a sharp pick up in physical coin buys, Day said. The U.S. Mint said sales of American Eagle silver coins were the second highest ever last month, although part of the rise was because of seasonal beginning-of-year effect. (See related story)

Day attributed the rise in silver’s price simply to market factors, like price having fallen so much previously, rather than any change in fundamentals for the metal or particularly strong investment demand.

NOW WHAT?

January’s rally for silver returns the market to just above where it was prior to the December break. So far it is bumping into resistance at the $34 area, and Day said that’s not surprising given that silver found a ceiling at that price level before.

1 2 3

Tags: price of silver, Silver, silver analysis, silver futures, silver futures prices, silver news, silver price, silver price 2012, silver price forecast, silver prices, silver spot, spot silver

Posted by Silver Guru on Feb 2 2012. Filed under Silver Analysis. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry