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The price of silver and shares of Silver Wheaton Corp. (NYSE:SLW) haven't performed well in the past couple of months. The third quarter financial reports of Silver Wheaton were published last week (November 5th). It showed a fall in the company's quarterly revenues and operating earnings because of a delay in delivery. The company's operating profitability remained high. In the Silver market, the launch of QE3 and the renewed concerns over the fiscal cliff the U.S is facing should have pulled up the price of silver. So why silver price and shares of Silver Wheaton aren't rising?

During the past couple of months, the prices of silver and Silver Wheaton haven't done well: shares of Silver Wheaton decreased by 1.44%. In comparison, the price of silver decreased by 6%. iShares Silver Trust (NYSEARCA:SLV) also declined by 6.21%. The chart below presents the changes in the prices of silver, Silver Wheaton and the S&P500 index normalized to September 28th, 2012. As seen below, shares of Silver Wheaton has slightly outperformed the price of silver and S&P500 index.

(click to enlarge)

One of the factors that may have pulled down silver is the recent appreciation of the USD. During October and November the Euro/USD declined by 1.2%. The modest fall in the Euro may have contributed to the weakness of silver. During the year, the linear correlation between silver price and Euro/USD was 0.47. Moreover, the linear correlation between Silver Wheaton's stock and Euro/USD was also 0.47. These correlations suggest that if the Euro and other "risk currencies" will continue to dwindle in the near future, it could impede the rally of silver prices and by extension Silver Wheaton's stock.

The chart below shows the rise in the moving linear correlation between the Euro/USD and silver price. As seen, in the past several weeks the linear correlation between silver and the Euro/USD remained strong and robust.

(click to enlarge)

The last FOMC meeting for the year, which will be held during December 11th and 12th, might affect the price of silver if the FOMC will decide to further expand its monetary policy. As I have pointed out in the gold and silver monthly report, it currently seems less likely that the Fed will introduce additional stimulus in the next meeting so close to its decision to launch QE3 back in September. Despite the launch of QE3, up to now, it didn't seem to affect the price of silver as indicated in the chart above. Nonetheless, in the months to follow QE3 is likely to raise the U.S money base and thus raise the concerns many people have about the potential devalue of the USD, which is likely to pull up the price of silver in the upcoming months.

The two main markets that encouraged the Fed to expand its monetary policy were the housing market and labor market. In recent months there were some signs of slow recovery in the U.S employment. The housing market has also started to show some positive signs: new home sales rose by 5.7% during September; housing starts and building permits hiked during September. These reports don't suggest the U.S economy is out of the woods but they signal some positive developments. These reports also lower the odds of the Fed intervening again the market. The other concern Chairman of the Fed still has is the "fiscal cliff". This situation is likely to raise the uncertainty of the U.S economy and thus may keep the price of silver and other safe haven investments high. I think the effect of the "fiscal cliff" is likely to come into play in the precious metals market in the weeks to follow.

For Silver Wheaton, the recent drop in revenues and operating profit may have curbed the rally of this company's stock, but if this decline was only due to a delay in delivery of silver, its revenues and profits are likely to rise in the next quarter. For silver, the recent appreciation of the USD against the Euro and other risk currencies and positive signs of recovery in the U.S economy may have contributed to the decline in the price of silver. Nonetheless, in the weeks to follow as the fiscal cliff will raise the uncertainty around the U.S economy and the QE3 will come into play and slowly affect the silver market, the price of silver is likely to rally.

For further reading see" Gold and Silver Outlook for November 12-16"

Source: Why Aren't Silver And Silver Wheaton Rising?