Silver is sliding back down towards $23 an ounce in another slump that will frustrate long-term holders of the precious metal.
Even though silver’s medium to long-term fundamental credentials remain solid, the metal has regularly been punished over the last year or so by shorter-term macroeconomic concerns. The latest one is that the price spikes in oil following the extension of supply cuts by OPEC+ will cause inflation to climb once again.
Certainly, efforts by central banks to return inflation back towards their 2% targets will need to continue for a while longer but this looks more likely to be achieved by higher for longer interest rates rather than more hikes.
Investors and traders remain unconvinced about the bull case for equities and are continuing to adopt a cautious trading stance and this is seeping into the outlook for silver. However, given that silver’s main industrial exposure is in sectors (solar and electric vehicles) least likely to be impacted by a recession with the move away from fossil fuels towards renewable ones set to continue regardless, the hit to the price seems overdone.
As a result, a bold long-term investor may view the latest dip towards $23 as another opportunity to top up holdings or buy into a metal that should be trading nearer $30 on a purely fundamental perspective.
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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