Silver tends to underperform other precious metals in times of heightened market uncertainty, as witnessed last week when it slumped 6% compared to 4% declines across other precious metals.
The silver price dropped below $27 and volatility rose to just under 30% on an annualized basis. While current market conditions are difficult for silver, the silver price now sits around the same level it was when it bounced at the end of 2012 and early 2011. Net speculative futures positioning is now back to end 2011 levels. [Silver ETFs Fall to 2011 Low]
European leaders summit
With the FOMC meeting now behind us, the focus again shifts back to the Eurozone crisis. The next signpost for markets is this week’s European leaders summit, beginning Thursday.
Whether policymakers have the political will to move to a more integrated Europe remains a key issue, especially for Germany. While German rhetoric is pro-Europe, its actions remain targeted towards immediate national interest, a situation that is unlikely sit well with other leaders for long.
Investors want decisive action, and another round of brinksmanship from Germany in terms of its calls for further austerity for indebted nations woul likely cause further market turbulence. Clarity around the Spanish/European bank bailout fund would also help ease frayed investor nerves and help stabilize financial markets.
ETFS Physical Swiss Gold Shares (NYSEArca: SGOL)