After a painful month for silver that saw its price plunge from near $26 an ounce to below $21 an ounce, the metal is finally showing signs of having found its bottom with the price now climbing tentatively back above $21. There hasn’t been a substantive change to the trading environment with Federal Reserve Chair Jerome Powell reiterating that the US central bank will continue to raise interest rates in June and July. Live Silver Price - $/oz This hawkish environment has seen silver punished consistently but it has now found a level where investors have the confidence to support the asset once again. While the fundamental case remains strong for silver, the likelihood of interest rate rises over the coming months on both sides of the Atlantic hasn’t allowed that case to be heard. For now, silver holders can breathe a sigh of relief that the losses may finally have paused but the road to recovery back to $25 still has lots of bumps ahead. 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 greenwashing 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.
18/05/2022
Silver’s slide looks set to continue this week with the metal now trading below $21 an ounce having ended last week touching levels last seen in July 2020. Silver has found itself caught up in the broader sell-off on equities and on gold, punished for being an industrial metal at a time where growth forecasts are being trimmed and hammered for its lack of yield at a time of rising interest rates. Live Silver Price - $/oz The turnaround in silver’s fortune has been pretty dramatic with the price falling from close to $26 an ounce in mid-April to below $21 an ounce barely a month later. On each occasion the price has fallen below a significant technical or psychological threshold, bullish investors will have hoped that the metal would find support to avert the slide. Yet for the short-term, silver is seemingly powerless to stem the bleeding of its price. Yet once markets finally pause for breath after some extremely volatile days that have seen huge losses across a number of different asset classes, silver will surely represent a strong buying opportunity with the fundamental case that was supportive in April still true today. 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 renewableenergy and the challenges of avoiding greenwashing 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.
16/05/2022
Silver’s brief recovery earlier in the week proved fleeting with the price plunging again yesterday to below $21 an ounce to the lowest level since July 2020. So far in early Friday trading, silver is making tentative gains in line with small corrections seen on equity markets after a series of huge drops over the course of the week that has left the S&P 500 Index on the cusp of a bear market. Live Silver Price - $/oz As has been stated numerous times in this commentary, the fundamental case for silver remains strong with industrial demand likely to remain strong for the foreseeable future as countries seek to decarbonize their economies and increase solar energy output, which relies on silver for the photovoltaic cells. Yet this bullish demand outlook has been overwhelmed by macroeconomic concerns where sustained inflation has forced central banks to adopt hawkish policies as they try and prevent this from escalating into recession. Silver has found itself continually punished for about a month now but for a brave investor willing to look over the horizon, these low levels surely present a buying opportunity. 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 renewableenergy and the challenges of avoiding greenwashing 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
13/05/2022
Silver is finally receiving some respite from traders after being punished by seemingly every macroeconomic and geopolitical indicator since the middle of May. Having sunk from comfortably above $25 an ounce to just above $21 an ounce in less than a month, the price has perked back up to $21.60 an ounce in early Wednesday trading. Today’s buying interest is a reflection of how undervalued silver has become, having sunk to levels not seen since July 2020. How far these initial gains can extend will likely be determined by the market’s reaction to the US inflation figure due out later today. Live Silver Price - $/oz Expectations are that inflation in April will come in slightly lower than March’s figure but still above 8%, a very high level historically and well above the Federal Reserve’s 2% target. In this inflationary environment, the Fed has been forced to implement a series of interest rate hikes and reduce its balance sheet, reducing the appeal of non-yield bearing assets like silver. Yet with the fundamental case for silver still strong, investors are starting to realise that silver still has an attractive investment case as a key material for the burgeoning solar energy sector, a potential hedge against inflation as well as a defensive asset to hold in case of any escalation of the war in Ukraine. In this context, a quick recovery back above $22 an ounce and onwards is highly possible. 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 greenwashing 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
11/05/2022
Silver has had a startling fall from grace among investors and now finds itself struggling to hold above $22 an ounce. It was only a matter of weeks ago that the metal was trading comfortably above $25 an ounce, with that level proving an important support. However, once that support fell away, the price has failed to find any support at lower levels and is now trading close to its lowest point of the year. Live Silver Price - $/oz The latest driver for silver’s decline is the strength of the dollar which has put pressure on all assets priced in the US currency. Furthermore, the reason for the dollar’s strength, the Federal Reserve’s planned series of interest rate hikes, is also a negative factor for silver as the appeal of the precious metal starts to dwindle when rates rise as its lack of yield makes other assets such as interest-paying bonds more attractive. It will be interesting to note the price reaction if and when silver does drop below $22 an ounce as this psychological threshold should surely finally provide support with investors taking the opportunity to buy into the metal’s depressed valuation. As has been mentioned on a number of occasions in this commentary, the fundamental case for silver remains strong with the industrial demand for the metal for the burgeoning solar energy industry presenting a particularly strong long-term outlook. Surely silver’s slide can’t continue for much longer. 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 greenwashing 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
09/05/2022
May 2022 - A Look Ahead Confirmation of the Federal Reserve’s interest rate hike, its most aggressive since 2000, has set the tone for investors in May. With inflation proving far from “transitory”, central banks in the US and Europe are being forced to adopt hawkish monetary policies to bring rising consumer prices back under control. Although gold’s initial price reaction to the Fed’s 50 basis point increase saw the precious metal climb back above $1,900 an ounce, the medium-term outlook is far more challenging. The Fed’s May hike was followed by the Bank of England implementing its fourth consecutive monthly hike, pushing the base rate to its highest level in 13 years. These increases are likely to be followed by further hikes by the Fed in both June and July while the European Central Bank is expected to finally increase its rate in July. In this environment, the appeal of holding gold wanes as its lack of yield makes other interest-generating assets such as bonds more attractive to investors. Gold Price Pushes Above $2,000 per Ounce Gold benefited from Russia’s invasion of Ukraine with the initial rush to safe-haven assets at the start of the conflict pushing the price of gold above $2,000 an ounce and close to its all-time high. Recent data from the World Gold Council reflected this surge with demand for gold in the first quarter of this year 34% higher than the same period a year earlier driven by heavy flows into exchange-traded funds. However while the war in Ukraine shows no sign of finding a peaceful resolution, some of that fear-induced trading triggered by Russia’s initial attacks on its neighbour has been unwound. As such, the price of gold has drifted steadily downward from its early March peak to drop below $1,900 an ounce by the end of April. Inflation Fears for Many With inflation the main worry for investors, all eyes will be on the latest US data when it is released on Wednesday, May 11th followed by the UK’s figure a week later on May 18th while the end of the month will give the first glimpses into which direction consumer prices are heading in the major European economies. While the recent moves by the Federal Reserve and Bank of England won’t have any impact on the April rate of inflation, the hope is that these prints represent the high point as the increasing interest rates succeed in curbing rising prices. So dominant has this theme become that any utterances by central bank members will be closely analyzed to divine any hints on the pace and severity of the reduction of balance sheets and trajectory of interest rates. The jittery nature of markets currently is likely to mean that any comment deemed more hawkish or dovish than anticipated triggers a fresh wave of volatility. Gold will not be immune from these jitters but any moves are likely to be less dramatic than those seen on equities. Gold Under Pressure - Central Bank Action It is worth noting that gold has found itself coming under considerable pressure due to the actions of central banks to try and curb inflation yet gold is typically viewed as a great hedge against inflation as an asset that has held its relative value over centuries. So while for the time being, inflation is having a negative impact on the price of gold, the current downward trend may soon spark buying interest from investors perceiving the precious metal as undervalued and a better choice of asset to hold than growth stocks in falling markets. Piecing all these factors together, while gold may not see huge gains in May unless there is a dramatic escalation in the war in Ukraine, the downward drift is likely to be curtailed soon with fair value in the range of $1,840-$1,870 an ounce. Silver Outlook - May 2022 Silver endured a tough end to April, slumping from comfortably above $25 an ounce to below $23 an ounce to levels not seen since early February. And this slide has continued into May with the metal trading a little above $22 an ounce following the sharp reversal in the market reaction to the Federal Reserve’s largest interest hike since 2000. Currently, investors seem to be finding each macroeconomic news indicator as a reason to mete out fresh punishment for silver. Yet a quick zoom out of the short-term, daily drivers paints a much more optimistic outlook for the metal. Fed Interest Hikes Expected Clearly, the likelihood of further interest rate rises by the Fed presents a considerable headwind to a non-yield bearing asset like silver, yet the other factors all point to reasons to be optimistic. While rising consumer prices are causing headaches for central banks and governments, silver is viewed as a good hedge against inflation. Add in the fact that markets remain on edge as long as Russia is attacking Ukraine and it points to silver’s appeal as a haven asset. Then throw in the strong fundamental case for silver with industrial demand on course to record a new high this year, driven by its key role in the photovoltaic cells for solar panels as countries seek to move away from fossil fuel dependence, and it's hard to understand why silver finds itself languishing at such lowly levels. For now, the Fed’s actions are overriding any other potential driver but the moment other factors are given a look in, then investors will surely give silver a fresh, more positive appraisal. Find out what Kinesis has to offer Learn More 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.
06/05/2022
