June 6th Weekly Silver Market Update

On this final day of the week, gold and silver performed in much the same way that they have all week. Even though this was an abbreviated week, precious metals still managed to continue to extend their downtrend. To put it simply, the many factors that influence the global marketplace are stacked up against metals and have been for some time now. Unfortunately, this much does not seem like it is going to change at any point in the near future, and that alone is keeping many potential investors at bay.

As we look ahead to next week, we are getting just a few steps closer to the next FOMC meeting. This is naturally one of the biggest occurrences in recent history because most people are expecting interest rates to be risen again.

OPEC Meeting A Fruitless Endeavor

Yet again, the oil cartel OPEC saw member nations meet in Central Europe this week to discuss potentially cutting daily production of crude oil. Keeping with recent trends, however, the meeting was mostly useless because there was almost no one who could see eye-to-eye. While larger member-nations are ok to cut daily production by some degree, smaller nations who are almost solely reliant on crude oil exports are not so keen on the idea of reducing output. This has been the same story for more than the past 6 months, and will likely continue to be.

Luckily for crude oil recently, factors in Africa and Canada have provided a temporary supply shortage which has helped prop up spot values. Before long, however, it is widely believed that the factors causing the shortages will go away and a supply-glut will once again become a theme.

Crude oil is so important to precious metals investors because more often than not the spot value of crude oil and the spot values of metals are positively correlated. More recently we have notice a bit of a negative correlation, but no matter what way you cut it crude oil cannot be mentioned without metals also being mentioned.

Upbeat Employment Data Dealt

The likelihood that we will see interest rate hikes before the end of the month was given another healthy boost this week thanks to some upbeat employment data from the United States. In fact, employment data in recent history has been upbeat and generally positive.

This week was no different as the weekly jobless claims report ended up showing that 1,000 fewer claims for first-time unemployment benefits were handed down last week than the week before. This is the third straight week that unemployment claims have fallen, and it brings the seasonally-adjusted average that much closer to the 165,000. As for how the general attitude towards the employment market in the US is concerned, people have very few concerns at this point.

Keeping with the upbeat employment news was the ADP private-sector jobs growth report, which was released on Thursday as well. This report indicated that many more jobs were created last month than were originally expected. Now, of course, the market is going to see what all this employment data means for the future of interest rates. With the FOMC meeting for June only days away, the speculation with regard to rate hikes has never been more believable. Though it is tough to say what the future holds, I am confident that the next few weeks will be very interesting.