Silver is struggling to find its identity in the current macroeconomic environment, with investors trying to determine if it is an industrial metal threatened by the prospect of the US defaulting on its debt and with countries around the world still grappling with high inflation that could tip their economies into recession. Or is it a safe haven asset, like its precious metal peer gold, that can offer some protection to portfolios given the level of uncertainty and fragile market confidence?
The truth as ever is somewhere in between and it is these pull and push factors (as well as its smaller market size) that can lead to silver’s more volatile ride than gold.
The fundamentals remain strong for silver with the metal a key component of the dominant industrial theme, the energy transition, and set for another year in which demand outstrips supply. Yet despite this buoyant outlook the price is effectively flat on the year having lost all its gains made earlier in the month.
With the Federal Reserve seeming to have paused on its interest rate hikes, the macroeconomic conditions are supportive for silver yet for now the metal is failing to attract investors’ attention. For the brave investor looking to the long-term, this latest dip represents another opportunity to top up their silver holdings but with strong resistance around $26 an ounce, it will need a significant catalyst to reward these silver aficionados.
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.
This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice.