Silver’s fall out of favour among investors has seen the price continue to fall with the metal trading below $23 an ounce and heading down towards $22 and the lowest levels since March.
A macroeconomic setting in which global interest rates are high and set to climb higher still is presenting a challenging environment for silver in spite of the metal’s strong fundamental outlook.
While investors are starting to look ahead to when the Federal Reserve may start cutting interest rates, with Goldman Sachs pencilling cuts to start in June next year, the present-day realities are of rates at around 5%. This is reducing the appeal of physical silver with the asset not providing investors with a yield and seeing other interest-bearing assets, such as bonds, favoured instead.
Yet throughout silver’s August slump the fundamental outlook for the metal remains as strong as ever, driven by the need for countries around the world to decarbonise. Given the vast amounts of solar energy that will need to be generated in the coming years and the significant quantity of silver required in each photovoltaic cell, a forward-looking and brave investor may view silver’s fall from favour as the ideal opportunity to top up holdings with the metal’s long-term potential to trade closer to $30 an ounce rather than $20.
Rupert is a Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. He brings with him a breadth of experience in writing about energy and commodities having worked as an oil markets reporter and then precious metals reporter during the seven years he worked at Bloomberg News.
As well as market analysis, Rupert writes longer-form thought leadership pieces on topics ranging from carbon markets, the growth of renewable energy and the challenges of avoiding greenwash while investing sustainably.
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