Jon Nadler has some great info which may explain the poor performance - seems to me China is quite apt to ride this one out as I have sated before and I will state again. They are an industrialized state and they DO NOT want silver to rise. It does not make it easy to cost when your raw material costs keep rising.
Thanks to Jon Nadler for this info below: visit Kitco for the story.
Here is a finding that flies squarely in the face of rosy projections that China will –somehow-be the salvation for the silver market, owing to its putatively “insatiable” demand for everything. Read on. Standard Bank (SA) commodity market analysis issued this morning correctly points out that silver demand is heavily (60%) dependent on industrial offtake (along with investment participation by speculators). Since silver demand has been helped by the fact that China had become a net importer of the metal in the period of from 2008 to 2011, many have jumped onto the bandwagon that believes that which we mentioned above.
However, it turns out that, at the moment, that country is filling the approximately 1,400 tonnes of metal it needs to fill the supply/demand gap it faces by drawing down internal stockpiles rather than importing silver. There has been a sharp decline in SGE silver premiums (from $4 per ounce to about a tenth of that recently) and there is evidence that Chinese imports of the white metal have also declined.
Thus, the SB team concludes that while silver has scope to trade back up near $40 again, it might not do so unless China finishes de-stocking, and that the current quarter might not allow for prices much above the $35 level actually.
I have to say I agree - we appear to have peaked and a reversal is the most likely scenario rather than the upside. Does anyone see it any different? I have read other articles and studied charts and it just does not have volume or momentum to break 35 this quarter. As I said we may revise the temporary top to be reached in February and it certainly appears that was the case.