Is SLV About to change course?

The upcoming FOMC meeting could result in shares of iShares Silver Trust (SLV) changing course and falling after they had rallied in the past couple of weeks. Let’s examine the upcoming FOMC meeting and state of the U.S. economy and how it all relates to the progress of SLV.

The FOMC and SLV

The main event of the week will be the last FOMC meeting for the year. This time the FOMC meeting will be followed by a press conference and the Fed will also release an update to its economic outlook.

In the past year the reaction of SLV was mostly negative following the release of the FOMC statement, as you can see in the table below.

During the year the FOMC tapered QE3 and ended it back in October – these steps were considered hawkish and tended to bring down SLV. Despite the FOMC’s slow move to become more hawkish during the year, the price of SLV lost “only” 13% up to date. Moreover, SPDR Gold Trust (GLD) lost even less with roughly 0.5% decline.

As a side note, the recent recovery of gold may have also provided some back-wind for silver, as the correlation between the two precious metals strengthened in the past several weeks.

For the rest of the report you can see it at Seeking Alpha

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