Silver Prices Plunge Amid Rising Interest Rates

Silver prices have plummeted to $63.81 an ounce, a decline of nearly 48% from its January peak of $121.62.

This sharp drop has led many to question whether silver is losing favor among investors, but the situation may be more nuanced than it seems.

The reason for the price drop can be attributed largely to changes in real interest rates, which have risen to 2.41%. This means that bonds are now paying a genuine 2.4% above inflation, making silver's yieldless and low-demand nature even more unattractive to investors.

Despite the decline in speculative crowding, with net long positioning sitting at the 20th percentile of the past 60 weeks, there is evidence that physical demand for silver remains strong.

In India, for example, a recent surge in imports has led to a premium of $4 an ounce over global prices, indicating that traders are willing to pay a higher price for metal, despite the falling futures price.