Silver Futures Trading | Are Economic Factors affecting the markets?

Silver had suffered massive liquidation that was perhaps overdone! $49.845 was our high of April th 25 and now less than a month later, we may have potentially bottomed at $32.30 ( silver futures prices as of 5/27/11 have bounced back up over 37)! While the Silver had seemed to lead the action in the marketplace earlier, it appears the Gold may be leading now. Part of the problem wasthe volatility in the Silver drove the exchanges to raise the Silver Margins so high . The Silver Market needs to consolidate and flatten to bring down the margins a bit before it can really take off again. The Silver Market does move frequently with the industrial metals as the growth of the economy goes hand in hand with the price action of the Silver Market. There are times also when the Silver takes on safe-haven properties.

Economic factors that may affect the Silver Market:

GDP figures Our expectations for US economic growth come in about 3 3.5 %. The earthquake in Japan is still a factor slowing our growth as auto parts and manufacturing may be delayed as Japan rebuilds its country after the devastation. Initial Jobless Claims - Initial Jobless Claims fell 29,000 to 409,000 last week. You can view the economic calendar of events to see when these numbers come out. The US Dollar Index Often pressures the tangible markets when it strengthens. We look for a weaker US Dollar to support the Silver Market. The inverse relationship is alive and well! Fund activity The Funds have the allocations to move the market. The rallies often are determined or at least started by fund activity. Investor sentiment The forecasters are out with newsletters and trade recommendations to spur further buying/selling in the marketplace. There are typically many factors to focus on. The sentiment of the traders is vital. Jitters in the market may support Gold more than Silver now as the Gold has maintained more of the safe-haven sentiment. The Chart The Daily Chart may lead traders to wait and see as trader mentality is attracted to the momentum of an already trending market. Silver demand The demand in the physical metals may often control the price action as traders attempt to predict the supplies and usage ratio. ETFs The ETFs in Silver have had plenty of movement both up and down as traders desire to be in a healthy move, but are reluctant to stay in during drawdowns in their investment products. Margin money Margins may have gone up for Silver itself, but also when traders are pressured in other sectors, they may liquidate metals contracts to suffice for extra margin required to hold other products. Pan American Silver is one of the largest Silver Mining Companies in the world. They boasted revenue rising 40 % to $190.5 million. The quarterly profit rose three times in quarterly profit. While we hate to see a washout in the marketplace, occasionally they are only a reflection of the previous move. Retracements are a necessary part of the equation. After all, that is a reflection of the Fibonacci Retracements. The margins may prohibit traders from taking the futures positions, but the options may be a way to garnish the benefits of the increased volatility and define a prescribed risk for the trade. Technically speaking! The July Silver contract had hit a high of $49.845 and just seemed to back off of the $50.00 target that many analysts had touted! ~Silver Futures Trading Chart~

We look for support at $30.93 and we look for potential buying opportunities at a lower price now or soon. It is suggested to always keep a stop-loss on a position immediately after it is entered. It is also suggested to stay alert and focus to stay Silver Savvy! Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.