Silver Monthly Fundamental Forecast October 2012

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Outlook and Recommendation

Silver closed a strong month trading at 34.53. This month has been a roller coaster ride for the

Highest: 35.228

Lowest: 31.578

Difference: 3.650

Average: 33.898

Change %: 7.29

 commodities sector. The silver price has received a significant boost with the announcement of the new U.S. Fed policy to resume pumping money into the economy to try and kick start employment recovery.  The gold price has risen by over 9% over the past four weeks that of silver has risen by some 23%, continuing the past pattern of silver tending to rise faster than gold on the upside.  The price rises in both appear to be being driven by large volumes of paper gold and silver traded on COMEX, but is puzzled by the lack of silver deposits into the major silver ETF, SLV.  This, he reckons, could be a sign of tightness in the market.

This could prelude the big short position holders in silver, and in gold, acting to try and take down the market.  and points out that we are at around the anniversary of what he feels was a major take-down in silver last year when it fell $15 – or 35% – in three days.

Silver’s price volatility, for whatever reason, is both an attraction and detraction for potential investors.  But, by and large silver moves up when gold does, but faster, and if the gold price continues to advance again after a period of consolidation, it is difficult to see that silver will not follow suit and exceed gold’s advances.  The gold: silver ratio, for those who follow that particular metric, has come down a little to 51, after around 54 before the latest price rises and this would be expected to fall further should both gold and silver continue to advance.

Bank analysts are also beginning to revise their predictions of year-end gold, and silver, prices upwards following the Bernanke QE3 announcement.  Forecasts of $1900 gold by the year end are now becoming almost commonplace, and suggest a silver price of approaching $40 again should these gold price predictions come about.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more recent analysis and information in our weekly reports and we provide daily updates and outlooks.

Central Bank Name: Fed Reserve

Date of next meeting or last meeting: Sep 13, 2012

Current Rate: 0.00%-0.250%

The Board of Governors of the Federal Reserve announces an interest rate. This interest rate affects the whole range of interest rates set by commercial banks, building societies and other institutions for their own savers and borrowers. It also tends to affect the exchange rate. Generally speaking, if the Fed is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the USD. The FOMC introduced QE3

Economic events for the month of October affecting EUR, CHF, GBP and USD

Date

Time

Currency

Event 

Forecast

Previous

Oct 1

 8:30

GBP

Manufacturing PMI

49.5

49.5

 

14:00

USD

ISM Manufacturing PMI

50.0

49.6

Oct 2

8:30

GBP

Construction PMI

50.0

49.0

Oct 3

8:30

GBP

Services PMI

53.1

53.7

 

12:15

USD

ADP Non-Farm Employment Change

148K

201K

 

14:00

USD

ISM Non-Manufacturing PMI

53.4

53.7

Oct 4

11:00

GBP

Asset Purchase Facility

375B

375B

 

11:00

GBP

Official Bank Rate

0.50%

0.50%

 

Tentative

GBP

MPC Rate Statement

   
 

11:45

EUR

Minimum Bid Rate

0.75%

0.75%

 

12:30

EUR

ECB Press Conference

   
 

12:30

USD

Unemployment Claims

371K

359K

 

18:00

USD

FOMC Meeting Minutes

   

Oct 5

7:00

CHF

Foreign Currency Reserves

 

418.4B

 

12:30

USD

Non-Farm Employment Change

111K

96K

 

12:30

USD

Unemployment Rate

8.2%

8.1%

Oct 8

7:15

CHF

CPI m/m

 

0.0%

Oct 9

8:30

GBP

Manufacturing Production m/m

 

3.2%

Oct 11

All Day

ALL

G7 Meetings

   
 

12:30

USD

Trade Balance

 

-42.0B

 

12:30

USD

Unemployment Claims

   

Oct 12

12:30

USD

PPI m/m

 

1.7%

 

13:55

USD

Prelim UoM Consumer Sentiment

   

Oct 15

12:30

USD

Core Retail Sales m/m

 

0.8%

 

12:30

USD

Retail Sales m/m

 

0.9%

Oct 16

8:30

GBP

CPI y/y

 

2.5%

 

8:30

GBP

PPI Input m/m

   
 

9:00

EUR

German ZEW Economic Sentiment

   
 

12:30

USD

Core CPI m/m

   

Oct 17

8:30

GBP

Claimant Count Change

   
 

8:30

GBP

MPC Meeting Minutes

   

Oct 18

8:30

GBP

Public Sector Net Borrowing

   
 

8:30

GBP

Retail Sales m/m

   
 

14:00

USD

Philly Fed Manufacturing Index

   

Oct 19

14:00

USD

Existing Home Sales

   

Oct 24

7:00

EUR

French Flash Manufacturing PMI

   
 

7:30

EUR

German Flash Manufacturing PMI

   
 

8:00

EUR

German Ifo Business Climate

   
 

14:00

USD

New Home Sales

   
 

18:15

USD

FOMC Statement

   

Oct 25

12:30

USD

Core Durable Goods Orders m/m

   
 

12:30

USD

Unemployment Claims

   
 

14:00

USD

Pending Home Sales m/m

   

Oct 26

8:30

GBP

Prelim GDP q/q

   
 

12:30

USD

Advance GDP q/q

 

1.3%

Oct 30

14:00

USD

CB Consumer Confidence

   

Oct 31

12:15

USD

ADP Non-Farm Employment Change

   

 

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About: FX Empire Analyst - Barry Norman

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