Silver prices have dropped below $50 an ounce, driven by investor fears of further Federal Reserve rate hikes and a stock market sell-off, rather than any changes in supply and demand. Despite a forecast for a sixth consecutive supply deficit, silver has fallen 18.9% since October 13, reaching $49.09 on Friday. The gold-to-silver ratio now stands at 79.4, meaning one ounce of gold buys 79.4 ounces of silver.
The decline in silver prices comes despite a drop in inflation-adjusted Treasury yields, which should theoretically benefit silver. However, the yield decrease was largely due to a technology stock sell-off, not easier Fed policy, which negatively impacted silver more than gold. Industrial demand, which accounts for over half of silver demand, is particularly sensitive to economic growth concerns.
The Federal Reserve held rates steady on Wednesday, but two members voted for a rise, and strong economic growth data kept a December rate hike in play. The next critical test for silver will come at the Fed’s December meeting, where the market currently assigns an 83% chance of a rate hike.
For long-term investors, the supply and demand fundamentals for silver remain unchanged. Metals Focus and the Silver Institute still predict a shortfall of 46.3 million ounces for 2026, though an interim review in mid-November may adjust this figure. The key for silver’s recovery will be whether the link between yields and the silver price reasserts itself if the Fed signals a pause in rate hikes.