Posted 12th September 2022

Silver’s Good Run Continues as Traders Buy Undervalued Asset

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Silver’s good recent run continues with the metal now above $19 an ounce even as both the European Central Bank and the Federal Reserve look set on a series of significant rate hikes in the coming months.

The fact that silver has been able to make these recent gains – even though the macroeconomic picture remains very hawkish – suggests that the precious metal had been oversold and overly punished by the prospect of ever-rising interest rates with traders now buying silver with the asset seen to be considerably below its fair value.

Silver’s recovery back above $19 an ounce will be of relief to investors, but the metal still remains considerably below where it was trading just a few months ago and the current levels still put it at the bottom end of its trading range of the last two years.

Positive news out of Ukraine, where the home forces have pushed back against the invading Russians, has also lifted markets with silver gaining a slight boost given its industrial exposure.

How long this recent tentative recovery can continue will largely depend on the actions of central banks in the coming weeks and months.

With an aggressive policy now priced in, any relenting by central banks will give silver a boost. But assuming large rate increases are indeed implemented, then it is hard to see silver climbing significantly above $20 an ounce.

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