Will Silver Change Direction?

The price of silver continued to rise in the past couple of weeks and reached its highest level since November 2013. Will the silver market continue to heat up or will it slow down? Let’s analyze the recent news that may affect the price of silver (SLV).

The rally of silver has reflected in the increase in demand for leading silver ETFs such as iShares Silver Trust. During this month, the Silver Trust’s silver price increased by 12%, and the amount of silver in the Trust rose by 1.1% to 163.63 tonnes. Silver related investments such as Silver Wheaton (SLW) also recovered during February – the stock is up by 17%. This week, the minutes of the FOMC meeting might have a short term effect on the price of silver. Let’s further explore this issue.

FOMC’s monetary policy and silver

Janet Yellen, the Chair of the FOMC, testified last week on the Hill regarding the FOMC’s monetary policy, in which she voiced her concern over the progress of the U.S labor market. Moreover, the U.S’s economic progress has slowed down in recent months; this, combined with the current low inflation – below the Fed’s target, could eventually lead the FOMC to reconsider its policy. After all, the FOMC has additional ways to jump-start the economy, if needed, such as raising its inflation target or pegging long term interest rates. But let’s not get too ahead of ourselves.

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

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