March 12th Midweek Silver Market Update

Gold and silver are trading significantly higher through the first half of the day Wednesday, helped by rising tensions in Crimea and a rapidly declining US Dollar. While US economic data for the day and the week are both relatively light, the eyes of US investors is elsewhere and what they are seeing is a bit unnerving. Next week’s FOMC meeting will hopefully add some stability to the marketplace, though there is no saying what it will actually do.

The US Dollar is continuing to decline against the euro currency as weaker than expected Chinese economic data continues to hit the world marketplace. While it is precious metals and the overall commodities market that usually fall victim to sub-par Chinese economic data, this time around it is the Dollar that is feeling the brunt of the force. This recent string of consistently poor Chinese data is coming in the wake of recently upbeat forecasts for 2014 economic growth. Though it is too early to tell for certain just how well or poorly the Chinese economy will do this year, it is safe to say that it is not off to the best of starts.

Tensions In Ukraine Receive A Boost From Further Military Action

Last week it seemed as though the significance of the crisis in Ukraine was decreasing with each passing day. Ever since the weekend, however, all that has changed as an increased number of reports of a larger pro-Russian military presence have been surfacing all across Crimea. The hotly contested southern region of Ukraine has been in the news for the past two weeks or so as it is caught in the middle of what seems to be a refreshed regional dispute between Ukraine and the Russian Federation.

Last week, the parliament of Crimea voted unanimously to rejoin the Russian Federation, despite the interim Ukrainian government saying that such a move will never happen. In 5 days time the citizens of Crimea will participate in a referendum in order to decide the actual fate of the region. Despite this process having made it through more than two weeks with no outbreak of violence, the referendum which is scheduled to be held Sunday seriously threatens that. There is no way Ukraine will stand idly by is Russia seizes control of Crimea while, in the same breath, there is no way that Russia will stand idly by if the interim Ukrainian government ignores the voice of Crimean citizens. This is all beside the fact that any number of additional countries are threatening to get involved and make this situation much more than a regional issue alone.

While it is unclear how the crisis in Ukraine will be brought to an end, the one thing that is for certain is that the revival of tensions in Crimea have thus far spelled positive news for spot gold and silver. Now, spot gold is near a 6-month high and is looking like it is back in the driver’s seat, at least for the time being.

Posted in Market News

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