Silver News

Silver looks set to end one of its best weeks in recent months by holding above $20 an ounce as the potential for a less hawkish Federal Reserve proved the catalyst to unlock some of the metal’s long-term value. Later today there will be some crucial September US jobs data which will give further clarity on the state of the world’s largest economy. With markets likely to adopt a holding position until these data releases, silver’s reaction will be interesting to watch as it finds itself stuck between two contrasting factors. Given silver’s far more industrial exposure than its precious metal peer, gold, a healthy US economy is helpful for the metal’s fundamental outlook and will help support demand with it a key component of the energy transition, used in photovoltaics and in the batteries of electric vehicles. However, a healthy US economy would also provide the Federal Reserve with more breathing space to continue its series of significant interest rate hikes as the US central bank tries to bring inflation under control. The recent rhetoric from Fed officials point to a determination to stay the course with upcoming hikes to a positive jobs figure would provide more wiggle room for them to initiate those. Given that it was the switch to a hawkish policy that triggered silver’s multi-month collapse from April onwards that saw it sink to its lowest level in more than two years, the prospect of more rate hikes is clearly bearish for silver. If silver can end the week still above $20 an ounce, then it would firmly illustrate that the lows are fully behind the precious metal with investors focusing on the longer-term outlook having already meted out sufficient punishment based on its shorter-term prospects. 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 inwriting 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 renewableenergy 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.

Rupert Rowling

07/10/2022

Although silver has dipped back below $21 an ounce in early Wednesday trading, the shot in the arm the precious metal has received on Tuesday is still more than strong enough to shift it out of the range-bound narrative the metal had been experiencing in recent weeks. Weaker-than-expected recent US economic and jobs data have raised the prospect of the Federal Reserve having to be less aggressive with its upcoming interest rate hikes to avoid tipping the world’s largest economy into a recession. Given that it was the switch to a hawkish policy in which the Fed implemented a series of large rate hikes that proved the trigger for silver’s multi-month decline from April onwards to its lowest levels in more than two years, the prospect of a more accommodative Fed going forward has been leaped upon by silver investors. After reaching its nadir in late August and early September, silver has shown much greater price resilience than gold in recent weeks with the metal looking greatly undervalued given its strong fundamental outlook. It has almost been looking for a catalyst to push it higher with this week’s economic data providing it. How high silver climbs to and for how long these gains are held onto will be determined initially by the strength of the US payrolls data due out on Friday and then further out the action the Fed actually takes on its next interest rate move when the committee meets later this month. 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 inwriting 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 renewableenergy 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.

Rupert Rowling

05/10/2022

Gold in October Gold investors will be hoping that the worst is now behind them after seeing the price of gold trend steadily down from above $2,000 an ounce as recently as March to barely above $1,600 an ounce during September. Macroeconomic Policy However, it is hard to see where these strands of optimism can be found with central banks, particularly the Federal Reserve, maintaining their rhetoric over the need for more significant interest rate hikes. Gold has suffered in this hawkish macroeconomic environment, with the precious metal less attractive at a time of rising rates, making interest-paying assets such as bonds or yield-paying, gold-backed currencies such as Kinesis Gold more favourable instead. Inflation is why central banks worldwide are hiking rates, with consumer prices rising much faster than the banks’ target of about 2%. Indeed, inflation has proven stubbornly high, far off the transitory shock regarded at last year's end. While gold has historically been seen as a hedge against inflation having retained its relative buying power over centuries, the impact of fast-rising interest rates has more than outweighed any potential price benefit that gold might have gained in previous highly inflationary periods, viewed through a dollar lens at least. It is worth noting that while gold’s performance in dollar terms has underwhelmed in recent times on the back of the strength of the greenback, gold has performed much better in other currencies, notably in pound sterling terms for example. Gold has also held its relative value against West Texas Intermediate oil, even with the volatility oil has experienced this year. As ever, the words and actions of the Federal Reserve and its officials will be closely scrutinised and will be the primary driver of the gold price in October. As such, October 12th and 13th look like key dates for gold investors, with the release of the latest minutes of the Federal Open Market Committee followed by the US September inflation figure. The hope will be that inflation has finally peaked with higher interest rates successfully curbing rising consumer prices. However, any indication that the peak hasn’t yet been reached will be detrimental to gold as it increases the likelihood of the Fed making an even more significant hike come the next interest rate decision. Rising Geopolitical Tensions Away from macroeconomic policy, where central banks face the tricky task of balancing the need for rate hikes to curb inflation, the ongoing war in Ukraine is a potential wildcard that could impact the price of gold and global markets more widely. The success of Ukraine’s counterattack in September has raised the prospect of an increasingly desperate Russia further escalating the scale of the conflict. Such an event would raise geopolitical fears, with gold a likely beneficiary of a risk-off market environment, with the precious metal proven as the ultimate safe-haven asset that has endured through centuries of wars. Taking all these things into account, gold is more likely to go down rather than up in October with no sign of the pressure being applied by central banks will ease. Given the losses that have seen the precious metal sink to its lowest levels in more than two years, the hope will be that the Ukrainian war has created sufficient haven demand for $1,600 an ounce to be stable support around which the price can stabilise. Silver Outlook Silver’s fortunes have moved out of sync with its golden peer, with September proving a month where the price of silver has treaded water rather than suffering another monthly decline. Support Despite Hawkish Environment Hawkish central banks are making all non-yield bearing assets, including silver, less attractive. While silver has undoubtedly been losing ground in the macroeconomic environment, shedding $8 an ounce from its March highs, the long-term fundamental demand for the metal has seen investors buy recent dips in the price and keep it supported around the $18-$19 an ounce mark. This scenario could well continue into October when hawkish speeches by central bankers and further interest rate hikes cause the price of silver to dip initially, only for the price to recover ground as value-seeking investors flood in. Demand Forecasted to Climb While the focus is very much on a short-term outlook in which persistently high inflation needs to be tackled to protect consumers from ever-faster price rises, the longer-term view in which governments and companies across the world need to progress in their net zero commitments is far rosier. Silver has a key role to play in the energy transition with its use in photovoltaics in the solar industry and the batteries of electric vehicles; demand is forecast to climb consistently as a result. Investors willing to look to the horizon see a metal that is way below its fair value. While rising interest rates make it hard to see silver making huge gains, it is equally hard to see the price going significantly lower. 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 inwriting 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 renewableenergy 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.

Rupert Rowling

03/10/2022

Silver continues to trade above $19 an ounce as investors grapple with the impact of central banks around the world hiking interest rates with a fundamental outlook for a metal that will be in big demand in the energy transition and looks overly cheap as a result. Silver’s trading picture from September onwards has seen any significant price dips caused by hawkish macroeconomic data or announcements have been followed by a quick mini-recovery. As a result, the metal has traded within the $18-$20 an ounce range for the last month and may well continue within that band for the foreseeable future with rate hikes putting a ceiling on prices while the need for silver in the future will ensure it doesn’t fall below $18. The end of this week brings the latest round of US employment figures and given silver’s greater industrial exposure compared with its fellow precious metal, gold; it will be important for silver investors to see a US economy that remains healthy to support future demand. While the current trading activity may be subdued, given the torrid run silver endured from April through to September, this consolidatory period will still be cherished by silver investors who can gain confidence that the lows are now behind them. 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 inwriting 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 renewableenergy 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.

Rupert Rowling

03/10/2022

Silver is ending the month by perking back above $19 an ounce to underline the interesting situation the precious metal finds itself in. Having suffered a brutal few months from April onwards on the back of the Federal Reserve’s switch to a hawkish stance in which it would implement a series of interest rate hikes to try and tame fast-rising consumer prices, silver’s price sank so low that it fell way below its fair value based on the fundamental outlook for the metal. As such, even though the Fed, and other central banks around the world, continue to raise interest rates, silver doesn’t really have any further for it to fall with buyers instead taking advantage of any dips to top up their exposure. The result is that silver now finds itself in a holding pattern around $18 to $20 an ounce A strong US dollar and hawkish central banks mean that silver is struggling to make significant gains and failing to challenge the threshold of $20 an ounce as a result, yet on the upside, any drops near to $18 an ounce prompt buying activity as investors respond to the cheapness of a metal that will be in big demand as the energy transition gains pace. Expect October to hold a similar pattern with these drivers set to persist for a while longer yet. 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 inwriting 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 renewableenergy 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.

Rupert Rowling

30/09/2022

Silver’s slide continues following the latest round of comments from senior Federal Reserve officials that reiterated the US central bank’s commitment to continuing to increase interest rates to calm inflation. While gold, silver’s precious metal peer, is at levels last seen 2 and half years ago, silver is still comfortably above the low for the year touched at the end of August. This reflects the contrasting situation silver finds itself in with the punishment meted out to the metal earlier in the year leaving very little downside room for it. As such even though the prospect of further rate hikes by the Fed and other central banks across the world remains a bearish driver for silver, there is only so far the price can dip before buying interest steps in to take advantage of an asset that looks heavily undervalued given its bullish long-term fundamental outlook given the metal’s key role in the energy transition. As such, while the metal may continue to drift lower in the short-term, any dip below $18 an ounce is likely to spark buying activity to see it quickly regain that threshold. 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 inwriting 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 renewableenergy 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.

Rupert Rowling

28/09/2022