The bull camp is having trouble dredging up supportive storylines, CME Group said on Monday as silver's losses pulled it below the $31 level, to $30.84. That difficulty has resulted in silver once again struggling to make significant gains and failing to sustain higher levels when progress is made.
Recently there has been a sense that economic conditions are stabilizing, if not improving. That has been accompanied by an expansion of investors' risk appetites — and with that has come a waning desire for safety and liquidation in the silver market.
This week, CME Group reported that stocks of COMEX silver reached their highest levels since August 15, 1997, a development that the firm said is likely to grab the attention of bears.
The fact that the liquidation bug seems to have spread to the ETF market will also likely be of delight to bears. Investors in these products dropped about 246 metric tons. Standard Bank described the decline as a wavering of commitment, stating that the decline, the likes of which has not been seen in two months, is “not insignificant.”But bulls mustered strength and made a showing Tuesday as the Federal Reserve headed into its first meeting of the year. The upward push snapped silver's three-day losing streak, allowing the metal to grab gains of $0.54 and close at $31.38. News that the US GDP declined for the first time in over three years during Q4 2012 provided silver with further support on Wednesday. Then came announcements from the Fed that monetary easing will continue and interest rates will remain low. That added fuel to the upward move. Silver rallied, climbing more than 3 percent during the day. The metal grabbed another $0.64 in gains, closing at $32.02.