Silver Has First Weekly Decline in Three Weeks

U.S. Silver prices edged lower this week, breaking a string of two weekly gains and falling from a more than two year high above $20 an ounce.

The metal started the week with near 50 cent daily swings, although closing prices were narrowed. Silver peaked on Wednesday when it touched $20.180 — the highest level since March 2008, but then closed to $20.009 an ounce. Prices continued to slide from there.

"A significant (largest in 60 days) drop in copper (more than 2.8%) obviously impacted some of the runaway enthusiasm hitherto manifest in the silver pits,"  Jon Nadler, senior analyst at Kitco Metals, Inc. said Thursday morning following silver’s fall from $20. "At the end of the day, much as some would love to convince us of silver’s lingering monetary attributes, the white metal is largely defined by its industrial demand features."

"Thus, even is there might be room left for a run to $22-$23 in this fall fund frenzy, the wary eye must still be focusing on where (other than ETFs) real demand for the metal will actually come from — since the manifest and overriding preoccupation appears to be about economic contractions, these days," Nadler added.

On Friday, December silver finished a penny lower to close at $19.845 an ounce on the Comex in New York.

"If deflationary worries re-emerge, we would expect gold to outperform the metals complex," Deutsche Bank AG said in a report. "Given our conviction that central bankers will lean heavily toward an inflationary outcome, rather than deflationary, we expect that metals such as silver and palladium could outperform."

For the week, prices fell 10.4 cents, or 0.5%. In contrast, silver soared 4.8% last week and 5.8% during the prior week.

Gold retreated slightly as well this week, which kept the gold to silver ratio close to unchanged at 62.8. Last Friday it took 62.7 ounces of silver to buy one ounce of gold.

The London silver Fix price was $19.90 an ounce on Friday, down 7 cents from Thursday and 12 cents away from its weekly high on Wednesday. London weekly prices ended up 24 cents, or 1.2%, versus the prior week’s gain of 63 cents, or 3.3%.

Bullion American Silver Eagles have been struggling of late. September U.S. Mint sales are only at 320,000 for the .999 fine silver coins, and those all sold this week. The prior weekly gain came in at 545,000, which in itself is not great when compared to most other soaring 2010 weeks. Demand has eased to the point that the U.S. Mint recently stopped Silver Eagle rationing, and it allowing its network of authorized dealers to purchase as many coins as they want. Year-to-date sales are just under 24 million, at 23,920,500.

Bullion weekly price charts for New York and London follow:

New York Futures Precious Metal Prices
	December Gold	December Silver	October Platinum	December Palladium
9/3/2010	1251.10	19.949	1561.10	531.45
9/10/2010	1246.50	19.845	1542.50	519.85

 

New York Futures Weekly Changes
	Up	Down	% Change	Gain/Loss
Silver		X	-0.5%	-$0.104
Gold		X	-0.4%	-$4.60
Platinum		X	-1.2%	-$18.60
Palladium		X	-2.2%	-$11.60

 

London Fix Precious Metal Prices
	Gold		Silver	Platinum		Palladium
	AM	PM		AM	PM	AM	PM
9/3/2010	1252.00	1240.50	19.660	1555.00	1553.00	526.00	524.00
9/10/2010	1248.75	1246.50	19.900	1552.00	1545.00	523.00	518.00

 

London Weekly Bullion Changes
	Up	Down	% Change	Gain/Loss
Silver	X		1.2%	$0.24
Gold	X		0.5%	$6.00
Platinum		X	-0.5%	-$8.00
Palladium		X	-1.1%	-$6.00