Silver Plummets Nearly Half of Value Amid Interest Rate Hikes and Record High Bond Yields
Silver's price has plummeted to its lowest level in nearly two months, with the iShares Silver Trust (NYSEARCA:SLV) losing nearly half of its value since its 52-week high. The fund, which holds physical silver bullion and manages $32.1 billion in assets, closed at $54.95 on Monday, down 5.49% from a prior close of $58.14.
The sharp decline is attributed to a combination of factors, including higher oil prices, the Federal Reserve's decision to raise interest rates, and a record high 19-year yield on the 10-year Treasury bond. The resulting strengthened dollar has also hit silver, which pays no income.
USAGOLD described the selloff as 'a purely macro, paper-market repricing.' In contrast, gold prices have been more resilient, with the SPDR Gold Shares (NYSEARCA:GLD) dropping 3.94% on Monday.
BMO has cut its fourth-quarter silver forecast to $67.40 an ounce from $71.40 but raised its long-term forecast to $47 from $36. The bank expects rates to pressure silver in the near term, yet sees higher long-run prices than before.