Silver prices: The top 10 most important drivers

1) US Dollar

Like most internationally traded commodities silver is priced in US dollars. At its most basic a decrease in the value of the US dollar relative to a commodity buyer’s currency means that the purchaser will need to spend less of their own currency to buy a given amount of the commodity. As the commodity becomes less expensive demand for the commodity rises, resulting in an increase in the price and vice versa.

As with gold but to a lesser extent, the value of silver, a fiat commodity currency, will also be largely determined by its attractiveness relative to other fiat currencies – the fiat paper currencies issued by central banks.

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End to seasonal stock build likely to signal end to iron ore price rally

Prices for the steel-making raw material declined to a near decade low in mid-January, but have since surged by 37% to $47.73 per tonne, its highest level since June. Prices have surged amid restocking by Chinese steel mills and signs of decreased iron ore supply.

Chart: Apr-16 iron ore futures contract


Set in a longer term context, this move is a drop in the ocean. Just two years ago iron ore prices were over $120 per tonne.

In China, which accounts for about 50 per cent of global steel supply, benchmark steel prices have also climbed, bolstering mills’ margins. Rebar, used in construction, closed at 1962 yuan ($US301) a tonne earlier this week after closing at a record low of 1626 yuan in November.

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Investors long on crude should be wary of shale producer hedges

Investment bank Societe Generale believes investors should look to purchase WTI crude futures contracts for Dec-17 at $45 per barrel or lower, given their view that the price is unsustainably low.

The same Dec-17 WTI contract hit a record low of $37.38 per barrel in January, rebounding to the low forties as rumours of an OPEC/Russia production cut surfaced.

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