December 2011 Silver Report

Silver Bells for December?

December was a white month for many, but it may have also had some silver investors seeing red! December closed with the silver price today at a slight increase over the month; about .3%, bringing the price to around $27/oz to finish the year. However, this was really the only bright spot for the month as both silver and gold declined in the last weeks of 2011. Silver has been on a steady decline, punctuated by sharp jolts of life, for the last three months with a high of about $32.00 and a low of $27.00-a less than wonderful spread for investors! So what was the deal?

There was no secret war or unknown factors; the decline in the price of silver stemmed from trends that had begun in October with a shaky European market combined with a slowly rebounding American economy. The combination put investors in the mindset of going back to old investments like currency and oil and staying away from precious metals like silver and gold. The overall trend for this economic quarter has been one of caution and of pulling away from things like silver into other stocks-thus a drop in price that is predicted to continue in the early weeks of January.

It’s not time to cash it all in yet and run for the hills. Precious metals are volatile, but they also have a solid foundation of use. Silver is used in a wide range of things and so will always be in the market. Furthermore, the range is wide enough that even if something like silver in cars bottoms out, silver in jewellery will still do well. So, analysts predict that thanks to the solid foundation silver has, it will be able to strengthen again-probably two to three weeks into the new year as the markets sort themselves out and people come down off the holiday high. Remember, you have to crouch low in order to jump high and stocks are sometimes no different.

Weekly Breakdown

Coming into December, silver continued its trend of very slow, but steady decline. The first full week (5th-9th) saw an overall decline of about 0.5% with the sharpest decline occurring on Thursday. Things only got worse as from the 12th the 16th, silver and gold prices suffered their worst drop since that horrible time back in September when silver margin prices shifted-over 4% for silver alone! Wednesday was the heartstopper day with investors going to bed in a very cranky mood. And then last week, silver declined yet again by around 1% while gold rebounded slightly. This week, silver continued to drop, though it has recovered a bit in the last day or so.

Silver into 2012?

So should you continue to invest in silver in 2012? There are two things to balance here: the recovery of the US economy which would lower the prices on silver vs a slowdown in the economy and low interest rates which would keep the price of silver high. It’s hard to tell which way things will go – 2012 is an election year which means economics sometimes takes a back seat; on the other hand, more stimulus plans may be introduced (to net votes) and that would raise prices. It’s very hard to say where silver will go, but at least precious metals overall tend to be good hedge investments and that shouldn’t change much in 2012.

December may not have been a sterling month for silver, but there are still high hopes about recovery into January, so don’t despair just yet! Invest in silver and see how far you can go.

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Related posts:

1. November 2011 Silver Report
2. October 2011 Silver Report
3. September 2011 – Silver Report