Silver has once again managed to edge up to the $23 per ounce level in the face of renewed weakness in global equity and bond markets.
While gold has rallied through the week, silver has been range-bound ($22.75-$23.25) in recent trading. However, this resilient performance has come against a background of renewed weakness in both major bond and equity markets, which bears some investigation.
Bond market weakness is linked directly to elevated global interest rates – a potential drag on non-yielding silver, but relatively well understood at this late stage of the interest rate cycle.
Equity weakness is potentially more problematic for silver if it is deemed a lead indicator of economic growth, given silver’s relatively high exposure to cyclical industrial applications.
At the moment, it is just too early to tell whether this is a blip or the precursor to a broader growth scare (which would presumably lead to lower rates). In the meantime, incoming macro data continues to exceed expectations, while forward earnings forecasts for listed stocks remain solid.
In the meantime, it is expected that the global silver market will be in deficit for the third successive year in 2023. Disappointing production figures from Peru this week also remind us that, while much attention has been on new drivers of silver demand, supply is not guaranteed.
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