September 18th Weekly Silver Market Update

Precious metals finished out the week strongly thanks to a decision, or lack thereof, by the Federal Reserve of the United States. To be honest, the only thing on the mind of investors this week was the FOMC meeting for September seeing as it meant a lot to the future of interest rates in the United States.

There was also some economic data on this week’s slate, but it was mostly overshadowed by the fact that most every investor was concerned with what the Fed might have to say.

Fed Keeps Rates Unchanged

For months, the market has been pondering the prospect of the Federal Reserve raising interest rates. In case you were unaware, rates in the US have been kept at near-0 levels for nearly a decade. Thanks to continuously improving economic conditions in the United States, the move to raise rates seems like the logical step for the Fed to take.

For more than 6 months now, investors have been pointing to this week’s Fed meeting as the likely time when interest rates might be raised. The meeting kicked off this week on Wednesday and as expected the global marketplace was generally quiet as investors awaited the Fed’s decision. Come Thursday, the Fed announced that rates would be kept at current levels thanks to uncertainty stemming from recent action in China. Basically, the Fed said that while US economic growth is suitable for rate hikes, the overall global marketplace is too volatile. Pointing directly to China and their economic slowdown, the Fed simply isn’t comfortable with raising rates at this particular point in time.

Continuing their statement, the Fed went on to say that while they are not raising rates this month, they expect to do so before the end of the year. In response to the FOMC meeting and related statement, the value of gold and silver both shot up dramatically. Now, silver is trading at over $15/ounce and gold is making impressive strides forward as well.

US Economic Data Continues to be Upbeat

This week did not offer too much in the way of US economic data, but what data was made available came back on the upbeat side of things. First and foremost, last week’s claims for unemployment fell by more than 11,000—which was far greater than expected. In addition to that, the 4-week moving average of jobless claims fell by nearly 5,000. This moving average is seen as a more accurate gauge of how the employment sector is doing. In recent months, the outlook on employment in the US has jumped up considerably, which is something that had many investors convinced that rates might be raised this week.

In addition to that, there were reports that US households are spending more money than they have been over the past few years. The increased expendable income is being attributed to the fact that energy prices are and have been moving downward. Crude oil has been sitting at multi-month lows for a while now, and while this is dragging gold and silver down, it is helping spur along the US economy.

As we look ahead to next week, you can rest-assured that we will be talking more about interest rates and when they might be raised. Other than that, the focus of the global marketplace will be on China as their government and central bank seems to not be able to go a full week without making some sort of policy change. For gold and silver, the end of the week rally was nice to see, but many people have doubts with regard to how permanent any of these gains will be.