December has only just begun, but already silver has seen some exciting price action, largely due to Switzerland's recent referendum on gold. Swiss voters took to the polls on Sunday to decide whether the Swiss National Bank should increase its gold reserves, with an overwhelming majority — 78 percent — voting against the proposal. Though expected by many market participants, the news sent the yellow metal to a three-week low of $1,142.91 per ounce. Silver, which often moves in tandem with gold, was not exempt from the carnage. It dropped sharply Sunday night, hitting $14.08 per ounce, which according to iNVEZZ.com is its lowest price in five years. However, as the chart below illustrates, silver didn't stay down in the dumps for long:
Indeed, silver was on the rise by early Monday, and by late afternoon had climbed above $16.50, a level it last saw midway through last week. Meanwhile, gold was back above $1,200. In terms of what sparked that dramatic comeback for precious metals, Bloomberg's Joe Deaux has pointed to a rally in the price of oil, which crashed last week following OPEC's decision not to cut production. He quotes Tai Wong, director of commodity products trading at BMO Capital Markets in New York, as saying, "[w]hat's driving the gold market here is crude. The move is snowballing as recent short covering and micro-term momentum buyers go long." Meanwhile, Kitco's Jim Wyckoff has also pegged oil's positive price action as impacting precious metals, though he sees "heavy short covering and buy stop orders triggered in the futures, and bargain hunting in the cash market" as other contributing factors. A weaker US dollar index and some safe-haven demand also came into play, he said.
Silver stocks also upNot to be outdone, silver stocks also leaped Monday, with the top gainers seeing share price increases of over 10 percent. As of the end of day Monday, those included: Silver Standard Resources (TSX:SSO,NASDAQ:SSRI) — up 12.15 percent on the TSX at $6.46. MAG Silver (TSX:MAG,NYSEMKT:MVG) — up 11.16 percent on the NYSEMKT at $7.07. Coeur Mining (NYSE:CDE) — up 10.95 percent on the NYSE at $4.56. The company was also likely boosted by the rumor that it's in talks to acquire Paramount Gold and Silver (TSX:PZG,NYSEMKT:PZG). Fortuna Silver Mines (TSX:FVI,NYSE:FSM) and Pan American Silver (TSX:PAA,NASDAQ:PAAS) also saw fairly substantial gains. The former closed up 9.82 percent on the NYSE, while the latter ended the day up 8.55 percent on the NASDAQ. Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article. Related reading: Gold Hits Three-week Low as Swiss Reject Gold Proposal, Rebounds Monday Morning OPEC Confirms No Production Cuts, Oil Drops Below $70 a Barrel Silver Price, Stocks Rebound Following Swiss Vote from Silver Investing News