Silver shook off the downward action and started on a bullish climb on this week. By the end of COMEX floor trading on Monday, silver was up $0.58 at $28.59 after breaking through a solid resistance level at the July high price of $28.44. By the close of the New York spot market, silver was up $0.72 at $28.81.
Silver’s positive performance continued overnight and played into the risk-on vibe seen Tuesday.
Strength in overseas equities paved the way for positive sentiment in North America. The US dollar hit a fresh four-week low. Spain also held a bond auction that was seen as highly successful given that the nation, which has been on the crisis radar recently, was able to borrow at significantly lower interest rates. That boosted confidence about the outlook for Eurozone troubles.
On Tuesday, silver managed a gain of $0.52, allowing the metal to post a close comfortably above the $29 mark at $29.33.
On the watch list for investors this week was the release of the minutes from the latest Federal Open Market Committee meeting, held from July 31 to August 1. The contents were revealed Wednesday afternoon and did not disappoint.
Investors concentrated on the portion of the document that says many members judge that additional stimulus will likely be warranted fairly soon unless incoming information points to a substantial and sustainable strengthening in the pace of economic recovery. This information is considered one of the strongest indicators yet that QE3 likely lies ahead. Investors are optimistically awaiting the Jackson Hole Symposium in September.
Silver continued riding the upward momentum on Wednesday evening and closed with another $0.50 gain at $29.83, just cents shy of another important technical resistance level, the June high of $29.89.
Silver futures on India’s Multi Commodity Exchange have also been upward bound this week. But perhaps of more interest to silver investors is the fact that the spot market has also been quite robust. The positive sentiment is being driven by the international trend, expectations for QE3 and demand associated with the wedding season.
Silver mining stocks were not unnoticed or unloved this week. The group performed well, with silver junior miners often leading the pack.
Despite weak industrial demand, silver showed little concern about the declining Chinese Flash PMI, which fell from 49.3 in July to 47.8 for August, the lowest level in nine months.
On Thursday, September silver on the COMEX closed the US floor session up $0.96 at $30.52, near the session high. The final New York spot price for the day was $30.76, a gain of $0.93, well above the targeted June high.
Silver bulls have not only regained momentum, but also have the technical advantage. Their next objective will be to drive prices above solid resistance at $31.50. For a serious downside move, bears will need to breach solid support at $28.50.
Silver Bull Resources (TSX:SVB,NYSE:SVBL) intersected high-grade silver at its flagship Sierra Mojada project in Mexico, according to results from the second batch of six holes in its underground drilling program.
Junior company news
Hecla will acquire 20 million common shares of Dolly Varden, an amount equal to 19.9 percent of the company’s outstanding shares, for $0.16 per share and will be granted certain rights exercisable as long as the company holds more than a 10 percent interest in Dolly Varden.
Dolly Varden will use the net proceeds to advance exploration and development at its Dolly Varden project in Canada during its ongoing underground diamond-drilling program.
The waste material was not economic in the past, but is probably economic today and could provide additional mill feed for El Tigre’s proposed processing facility, the company’s press release states.
Securities Disclosure: I, Michelle Smith, hold no direct investment interest in any company mentioned in this article.