Silver has failed to enjoy the same dramatic surge in its price experienced by its precious metal peer gold. The price of silver holding just under $22 an ounce, with the initial rally that saw it gain almost $2 an ounce now paused.
While silver certainly has haven appeal, it isn’t considered in the same class as gold in this regard, meaning it hasn’t seen the flood of demand that has pushed the gold price up by $100 an ounce in a matter of days.
Tempering this haven demand for silver is the metal’s greater industrial focus over gold. Silver is used in a wide range of sectors, most notably in the energy transition where its conductive qualities see it used in photovoltaics in solar energy and in the batteries of electric vehicles.
Therefore, the prospect of the US, the world’s largest economy, tipping into recession as a result of these banking failures will be a potential headwind for silver.
That said, the energy transition is necessary and will therefore be one of the industries least affected by a recession so the fundamental outlook for silver can remain healthy, irrespective of what the medium-term fallout of the collapse of at least three US financial institutions proves to be.
For now, silver investors will be looking to next week’s Federal Reserve committee meeting and hoping that the US central bank surprises markets by pausing its expected rate hike of 25 basis points. However, after the European Central Bank carried through with its planned 50 basis point increase yesterday, that is looking less likely now.
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