December 10th Midweek Silver Market Update

Gold and silver spot values are reeling a little bit on Wednesday, but after two days of solid gains, most investors will take it. The first two days of this week saw gold and silver make significant gains, and because of that, most people anticipated that the losses from profit-taking would pile up today. Much to the surprise of everyone, however, gold and silver spot values are continuing to improve on Wednesday, albeit by slim margins.

This week is not going to play host to too much economic data, but there will be plenty of market factors for investors to pour over and discuss. In addition to continued attention being paid to the crude oil market, investors will also be interested to see what direction global equities head in as we venture deeper into the week. Up to this point, however, global equity markets have had a tough go of things through the first few days of the week.

Crude Oil Remains In the Spotlight

For the last month or more, crude oil has been in and out of the headlines due to its recent price action. For more or less the past month, crude oil has been slumping and losing a good amount of value. There are quite a few reasons for this, but out of all those reasons, none is more pervasive than the fact that the supply of crude oil is significantly more abundant than it was only a few months ago.

You see, the United States has really increased their output of crude oil in recent months, and it is finally having an impact on the global market. Because of the increased amount of US crude oil in the global supply, it only makes sense that prices are moving downward.

In addition to there just being more oil on the market, the absence of a war premium is really helping things. A war premium, for those who may not know, is an added 10%-25% on top of the cost of oil due to the fact that it was extracted from a war torn part of the world (ie the Middle East). It will be interesting to see, over the next few days and weeks, if crude oil will bounce back, or if the price will remain near 5-year lows. Up until this week, slumping crude oil brought the value of gold and silver down with it, but that has all changed due to a dimming outlook on global economic growth. So long as people are still worried about the global economy, safe-haven demand for gold and silver will likely be enough to keep spot values propped up.

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