Silver’s slide below $18 an ounce to levels not seen in more than two years has dashed hopes that the bottom recorded in July would prove to be the low for the year.
A strong dollar, which is trading near record highs, allied by a Federal Reserve intent on raising interest rates multiple times over the coming months has forced silver down and drained away optimism that built up in August as the metal consistently held above $20 an ounce.
Today’s payroll figures out of the US are likely to reaffirm that the world’s largest economy remains healthy and that high inflation isn’t yet having a material impact on employment nor manufacturing output. While this is a positive for silver, given its industrial use in sectors including solar energy and electric vehicles, for now this is overwhelmed by the actions central banks across the world are taking to bring double digit inflation back under control.
It is worth noting that silver futures have now sunk significantly below where the metal can be bought in person, with the physical market at a premium to the paper one. This underlines both how far silver has fallen as well as demonstrating that the fundamental supply and demand outlook is not being matched by the price action on the financial markets, presenting a buying opportunity for a brave investor.
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. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.
