Themes: Silver, Metals, Inflation Hedge
You may be puzzled at silver’s movements over the past two months. Since hitting an impressive high in early June, it’s been trading at a 10-week low. This is due to a fall in industrial metals demand and downward pressure from weaker gold prices.
But don’t hit the panic button just yet.
Despite some sell-offs from investors, silver hasn’t lost its appeal. Like gold, it is a great store of value and inflation hedge. Plus it’s always shown high price volatility. After all, its primary use is as an industrial metal - and global industrial demand is hardly stable.
In today’s chart, we’ve tracked the year-to-date performance of the iShares Silver Trust (ticker: SLV; red line). It’s up 11% since Jan and is still trading above its 200-day moving average (DMA; orange line). This is a good technical sign.Silver may have had a slow run recently, but should rebound in August
Source: Financial Times
Silver is down by nearly 20% from its 2 June high of $15.7 (circled), but industrial growth typically slows during summer time. Silver’s physical fabrication demand is very likely to rise during a seasonal pick-up in August. And then we should see prices moving higher.
For now, silver’s trading range of $12-$13 from the past week could hold up for the immediate term. Over the next month however, investors will likely anticipate higher silver prices and start to pile in.
Looking ahead, a decline in the US dollar and soaring inflation concerns are big factors that will push silver’s prices higher. Don’t make the mistake of knocking the white metal off your radar.
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