Posted 6th July 2022

Silver Is Stuck Below $20 as Strength of Dollar Pours Fresh Pain on Unloved Metal

silver bar stack polished

Silver remains below $20 an ounce at levels last seen two years ago.

The climate of ever rising interest rates combined with concerns over the economic growth prospects that could see high inflation tip over into a recession have dealt silver two large blows.

The series of interest rate hikes implemented by the Federal Reserve and other major central banks, with Australia the latest hiker, has created an environment where non-yield paying assets such as silver are much less attractive. Added to this, the Fed’s aggression has seen the US dollar strengthen with its gains further boosted by the greenback becoming the haven asset of choice amid jittery market conditions, with gold seemingly having fallen out of favour. 

Live Silver Price – $/oz

While inflation on the face of it would be a boost for silver, this has been more than offset by the hawkish monetary policies adopted by central banks. The fear that these measures to tackle inflation will trigger a recession or stagflation have further hit market confidence with silver pulled down with its industrial exposure. 

For now, silver just can’t find any support but as stated numerous times in these commentaries, the medium-term outlook remains bullish for silver, given it is a key component of two of the most important technologies of the energy transition, in solar energy and electric vehicles. As soon as its fortunes turn, silver could rally quickly but for now it looks like there is more pain for holders to endure first.

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.