Silver Weekly Fundamental Analysis September 3-7, 2012, Forecast

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Introduction: Silver futures are standardized, exchange-traded contracts in which the contract buyer agrees to take delivery, from the seller, a specific quantity of silver (eg. 30000 grams) at a predetermined price on a future delivery date.

Some Facts about Silver

Silver is a soft, shiny and heavy metallic element with a brilliant white luster. A very ductile and malleable metal, its thermal and electrical conductivity is the highest of all known metals.

Besides being used as a store of value, other main uses of silver include applications in areas such as electronics, photography and as antiseptics.

Consumers and producers of silver can manage silver price risk by purchasing and selling silver futures. Silver producers can employ a short hedge to lock in a selling price for the silver they produce while businesses that require silver can utilize a long hedge to secure a purchase price for the commodity they need.

Silver futures are also traded by speculators who assume the price risk that hedgers try to avoid in return for a chance to profit from favorable silver price movement. Speculators buy silver futures when they believe that silver prices will go up. Conversely, they will sell silver futures when they think that silver prices will fall.

Weekly Analysis and Recommendations:

Silver ended the week at 31.767 gaining for the week, as precious metals were strong in the current environment. The more traders’ sentiment leaned toward the Mr. Bernanke announcing or support QE the most metals were able to gain.  Silver futures prices on Friday rallied sharply, hit a fresh five-month high and are now well into the 30.00 price level The precious metals markets took flight late Friday morning following the much-anticipated remarks by Federal Reserve Chairman Ben Bernanke at a Fed symposium in Jackson Hole, Wyoming. The Fed chief strongly hinted fresh, unconventional U.S. monetary policy stimulus will be implemented at some point. Indeed, he left the door wide open for a fresh quantitative easing initiative to be unveiled at the September FOMC meeting, or at some point in the not-too-distant future.

Date

Last

Open

High

Low

Change %

Aug 31, 2012

31.767

30.447

31.818

30.310

4.34%

Aug 30, 2012

30.445

30.755

30.965

30.270

-1.02%

Aug 29, 2012

30.758

30.898

31.025

30.615

-0.44%

Aug 28, 2012

30.895

30.820

31.048

30.578

0.24%

Aug 27, 2012

30.822

30.953

31.310

30.688

-0.40%

The thought of the Feds supporting QE gave more belief that the ECB would do the same this coming week and possibly the PBoC, which would be very positive for industrial metals.

There was more weak economic data coming out of the European Union. The EU unemployment rate rose to 11.3% in July, while inflation checked in at 2.6% in August, on an annualized rate, which was higher than expected. There were also rumors and rumblings in the market place that a German finance official was going to resign, which led to further speculation that European Union monetary policy will soon be eased further. We’ll find out more next Thursday when the monthly meeting of the European Central Bank occurs, including a highly awaited press conference from ECB head Mario Draghi. The market place does expect the ECB to announce a fresh monetary stimulus package soon.

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.

Tier 1 and 2 Economic Releases for August 27-31, 2012

Date

Currency

Event

Actual

 

Forecast

Previous

Aug. 27

SEK

Swedish Retail Sales (MoM) 

0.30%

 

0.20% 

-0.30% 

 

EUR

German Ifo Business Climate Index 

102.3

 

102.6 

103.2 

 

EUR

German Current Assessment 

111.2

 

110.8 

111.5 

 

EUR

German Business Expectations 

94.2

 

95.0 

95.5 

Aug. 28

AUD

HIA New Home Sales (MoM) 

-5.6%

 

 

2.8% 

 

EUR

GfK German Consumer Climate 

5.9

 

5.9 

5.9 

 

USD

CB Consumer Confidence 

60.6

 

66.0 

65.4 

Aug. 29

AUD

Construction Work Done (QoQ) 

-0.2%

 

1.0% 

7.8% 

 

CHF

KOF Leading Indicators 

1.57

 

1.50 

1.41 

 

EUR

German CPI (MoM) 

0.3%

 

0.2% 

0.4% 

 

USD

GDP (QoQ) 

1.7%

 

1.7% 

1.5% 

 

USD

Pending Home Sales (MoM) 

2.4%

 

1.0% 

-1.4% 

 

USD

Beige Book 

 

 

 

 

 

NZD

Building Consents (MoM) 

2.0%

 

3.0% 

5.7% 

Aug. 30

JPY

Retail Sales (YoY) 

-0.8%

 

-0.2% 

0.2% 

 

AUD

Building Approvals (MoM) 

-17.3%

 

-5.0% 

-1.0% 

 

AUD

Private New Capital Expenditure (QoQ) 

3.4%

 

2.4% 

7.7% 

 

EUR

German Unemployment Change 

9K

 

8K 

9K 

 

USD

Core PCE Price Index (MoM) 

0.0%

 

0.1% 

0.2% 

 

CAD

Current Account 

-16.0B

 

-15.0B 

-10.2B 

 

USD

Personal Spending (MoM) 

0.4%

 

0.4% 

0.0% 

 

USD

Initial Jobless Claims 

374K

 

370K 

374K 

 

USD

Continuing Jobless Claims 

3316K

 

3307K 

3321K 

Aug. 31

KRW

South Korean Industrial Production (YoY) 

0.3%

 

0.5% 

1.4% 

 

JPY

Unemployment Rate 

4.3%

 

4.3% 

4.3% 

 

JPY

Tokyo Core CPI (YoY) 

-0.5%

 

-0.6% 

-0.6% 

 

JPY

Industrial Production (MoM) 

-1.2%

 

1.7% 

0.4% 

 

GBP

Nationwide HPI (MoM) 

1.3%

 

0.1% 

-0.8% 

 

EUR

CPI (YoY) 

2.6%

 

2.5% 

2.4% 

 

EUR

Unemployment Rate 

11.3%

 

11.3% 

11.3% 

 

CAD

GDP (MoM) 

0.2%

 

0.1% 

0.1% 

 

USD

Chicago PMI 

53.0

 

53.5 

53.7 

 

USD

Michigan Consumer Sentiment 

74.3

 

73.6 

73.6 

Historical: From 2010 to present

Highest: 49.813 on Apr 25, 2011

Average: 28.468 over this period.

Lowest: 14.655 on Feb 05, 2010

 

Economic Highlights for the upcoming week… Tiers 3 keep your eyes on these

Date

Time

Currency

Event

Forecast

 

Previous

 

 

Sep. 04

05:30

AUD

Interest Rate Decision 

3.50% 

 

3.50% 

 

 

 

15:00

USD

ISM Manufacturing Index 

50.0 

 

49.8 

 

 

Sep. 05

02:30

AUD

GDP (QoQ) 

0.8% 

 

1.3% 

 

 

 

14:00

CAD

Interest Rate Decision 

1.00% 

 

1.00% 

 

 

Sep. 06

02:30

AUD

Employment Change 

5.0K 

 

14.0K 

 

 

 

02:30

AUD

Unemployment Rate 

5.3% 

 

5.2% 

 

 

 

12:00

GBP

Interest Rate Decision 

0.50% 

 

0.50% 

 

 

 

12:45

EUR

Interest Rate Decision 

0.75% 

 

0.75% 

 

 

Sep. 07

15:00

CAD

Ivey PMI 

58.0 

 

62.8 

   

Government Bond Auction

Date  Time  Country 

Sep 03  09:10  Norway  Bond auction

Sep 03  10:00  Belgium  OLO auction

Sep 04  00:30  Japan  Auctions 10Y JGBs

Sep 04  09:15  Austria  Bond auction

Sep 04  09:30  Belgium  Auctions Dec 2012 (3M) & Feb 2013 (6M) T-bills

Sep 04  14:30  UK  Details 0.75% 2034 I/L Gilt & 1.75% Sep 2022 Gilt on Sep

Sep 05  09:10  Sweden  Nominal bond auction

Sep 05  09:30  Germany  Eur 5.0bn Sep 2022 Bund auction

Sep 05  09:30  UK  4.5% 2042 Gilt auction

Sep 06  00:30  Japan  Auctions 30Y JGBs

Sep 06  08:30  Spain  Bono auction

Sep 06  08:50  France  OAT auction

Sep 06  09:10  Sweden  I/L bond auction

Sep 06  15:00  US  Announces 3Y Notes on Sep 11, 10Y Notes on Sep 12 &

Sep 07  15:30  Italy

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About: FX Empire Analyst - Barry Norman

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