Four Reasons Silver Prices Are Melting Monday

Michelle Remo, “Big 4″ observer
September 25, 2012 /

The price of silver pulled back from a six-month high Monday, owing to profit-taking, the U.S. dollar strengthening, a major cartel dump and overheated stockpiles.

Spot silver prices fell 1.51% to $34.10 an ounce. It’s rallied 18% in the past month and 24.28% year to date. By contrast, commodities lost 1.25% the past month, while adding 9.47% year to date. The S&P 500 rose 3.45% the past month and 17.97% year to date.

Fund managers and traders are booking profits as the third quarter ends this week, says David Morrison, a market strategist at GFT.

“Silver appears to be struggling to break and hold $35 an ounce, a level which acted as resistance in October and November last year,” wrote Morrison.

Walter de Wet, an analyst at Standard Bank, sees low industrial demand for the white metal.

“The latest China customs data has shown that silver imports grew in August to 304 tons, compared to the 272 tons imported in July,” de Wet wrote in a client note. “While this might be a signal that the upward trend in silver inventories in China is ending, we still believe that domestic stockpiles are extremely large when compared to the lackluster fabrication demand.”

A major, undisclosed “cartel” dumped its silver this morning, halting the rally, said Terry Sacka, chief strategist at Cornerstone Asset Metals in Palm Beach Gardens, Fla. Cartels are bullion banks such as HSBC in China, Barclays in England and J.P. Morgan in the U.S.

“They are currency and market manipulators,” Sacka said. “They control or try to control the physical market to aid and abet the fiat markets and governments they help out. They try to control the impression of inflation or debt and credit globally.”

In the last 24 hours, they sold 62.5 million ounces or 2-1/2 times the annual U.S. mine production in the futures market, he said.

IShares Silver Trust ( SLV ) fell 1.4% to $33.01.

Global X Silver Miners ETF ( SIL ) gapped down 3.09% to 24.46. PowerShares Global Gold & Precious Metals ( PSAU ) skidded 2.74% to 41.12.

PowerShares DB U.S. Dollar Index Bullish ( UUP ) jumped 0.18% to 21.79.


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