Posted 22nd June 2022

Silver Slips Close to $21 as Recession Fears Allied to Interest Rate Hikes Dwindle its Appeal

silver bar bullion kinesis

Silver has slipped closer to $21 an ounce amid another down day for stock markets as fears mount that runaway inflation will tip over into a global recession as central banks face the unenviable task of curbing rising prices without choking economic activity. 

The metal has fallen out of favour among investors with every negative driver leapt on to prompt often exacerbated declines for silver. Take today for example: risk-off sentiment typically sees haven assets such as gold and silver benefit, yet the broader concern that interest rates will need to keep on rising has denuded these potential gains. However, while gold is down about 0.4%, silver has been hit with a 1.8% plunge currently.

Live Silver Price – $/oz

While this reflects the reduced trading volumes of silver versus gold that do leave silver more prone to sharper and more volatile moves, it also demonstrates the willingness of investors to kick the boot in against the metal.

The prospect, and indeed the reality, of rising interest rates are undoubtedly detrimental for the appeal of the non-yield bearing asset of silver while economic slowdown will also reduce the metal’s industrial appeal.

However, given the metal derives a lot of its industrial demand from two of the key sectors of our time: batteries for electric vehicles and photovoltaics for solar energy; the negative case for silver looks to be overplayed and in the medium-term the metal has plenty of potential to return to the $27 an ounce level seen as recently as March. 

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.