“I’m surprised silver isn’t down more, considering the move in gold,” says Bob Haberkorn of RJO Futures, a broker. Silver tends to imitate and magnify gold’s behaviour. Both are monetary metals, or traditional stores of value, but the silver market is smaller, and so fewer trades are needed to affect prices. So the slide of 15% in the past few days could have been worse. Silver has hit a 30-month low under $23 an ounce.
With sentiment towards gold evidently souring, this casts a shadow over silver’s near-term prospects. But the white metal also seems to be suffering from jitters over global growth, as silver is an industrial as well as a monetary metal.
The latest Chinese data has “put a damper on anything commodity-related”, says Haberkorn. There’s also less scope than usual for stronger growth to prop up silver as stockpiles are unusually high, says Nicholas Larkin on Bloomberg.com.
None of this makes silver a write-off. Inflation remains a risk due to money printing, while emerging markets are gradually increasing their exposure to gold, so there is still scope for the yellow metal to recover and drag silver along in its wake.
Future industrial demand looks healthy as new uses are being discovered for silver. For now, however, “waning safe-haven value” for monetary metals is the key market theme, says James Paulsen of Wells Capital Management. So there could well be further nasty slides ahead.