Silver price plummets to five-year low following Swiss referendum

on Dec 1, 2014

**Silver Price**, Monday, December 1: The price of silver has plummeted to a five-year low in today’s trading session. Prices of precious metals came under pressure following news that voters in Switzerland rejected the ‘Save Our Swiss Gold’ referendum.
Silver for immediate delivery had shed 2.9 percent, or 45 cents, to $15.01 as of 06:36 GMT, and was trading over 10 percent below its 50-day simple moving average. It fell as much as 8.91 percent to $14.08 in earlier trading, the weakest since August 2009. Spot silver has suffered a second session of steep selloffs after closing 4.51 percent in the red on Friday.
Precious metals took a hit after Swiss voters overwhelmingly rejected a proposal to boost central bank gold reserves, providing a new trigger for selloffs. The “Save our Swiss gold” initiative, which would have obliged the Swiss National Bank to increase its gold reserves to 20 percent of its assets from around eight percent currently, was rejected by 77 percent of voters.
Reuters quoted a precious metals trader as saying:

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“A ‘no’ was expected but there was probably a risk premium factored in. That’s why we are seeing this liquidation today”. According to him there were a huge number of stop-loss orders below $15 for silver.
“The move happened in thin market conditions, even before Tokyo opened. The lack of buying interest and the stop-loss orders triggered this big move.”
The price of silver for December delivery had plunged 46 cents, or over three percent, to $14.92 as of 06:40 GMT. The more actively traded March contract stood at $14.98, down 2.6 percent intraday. Scotiabank wrote in a report on Friday:
“Momentum indicators have shifted rapidly, with the RSI falling toward oversold territory and breaking materially below its short term MA’s. Beyond 15.34, we would look to 15.00 and 14.40 as key downside risk levels. Any upside is likely to be limited above the 21 day MA (16.02).”
Based on the two most actively traded COMEX contracts, with a total volume of trade in gold and silver at 75,147 contracts as of 06:40 GMT today, the gold:silver ratio was at 77.19, up 2.31 percent from last week’s 75.45 close. According to Scotiabank, the ratio has broken to a new multi-year high, above 75.00 and focus has once again shifted to the October 2008 high of 84.50.


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