The white metal is feeling the impact of a rebounding US dollar and an investor retreat from precious metals.
Silver lost the gains it made in the previous session when it dipped on Tuesday (November 20) as outside markets were affected by a rallying greenback and a major sell-off in the US market.
Both silver and gold felt the heat of the rebounding US dollar and the retreat that investors made from the precious metals as world stock market declines ignited demand for safe-haven debt and the US currency.
“It seems like most people are leaving the stock markets, flocking into bonds and ignoring the gold [and silver] market at this moment,” said Walter Pehowich, executive vice president of investment services at Dillon Gage Metals.
Jim Wyckoff of Kitco News, added, “[g]lobal stock markets were also mostly lower overnight, following the solid losses posted in the US stock indexes on Monday [November 19].”
This most recent price slip is nothing new for the white metal, in fact, while its sister metal gold has begun making some rebounds in the market, many investors are looking at silver as an overall disappointment for the year.
“[S]ilver has moved to the bottom of its range and made a marginally new low on the December futures contract on November 13,” stated Andrew Hecht of the Hetch Commodity Report.
Additionally, Mike McGlone, senior commodity strategist at Bloomberg Intelligence, revealed that sentiment in silver is currently at levels that have often signaled significant bottoms.
While the white metal tends to follow gold’s movement in the markets and has generally also been negatively affected by a strong US dollar, silver did not follow the yellow metal’s climb up to the other side.
Adding to the pressure on silver is the fact that, according to a recent report from the CPM Group, the gold/silver ratio is at around 85:1. This means that it now take 85 ounces of silver to purchase 1 ounce of gold.
While this means that silver is cheaper to hold than gold, it does not bode well for the white metal if the markets turn around and all investors see is that the yellow metal is worth more in their portfolios.
As of 4:32 p.m. EST silver was down 0.83 percent, trading at US$14.29 per ounce.
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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.