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Silver Followed Gold’s Losses in 2015

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Silver: industrial demand

Alongside the plunge in gold prices, silver followed a nearly similar downward path. Silver has fallen about 8.9% so far in 2015, slightly less than gold’s 9.5% fall. Silver is less sought after for its appeal compared to gold, and it is predominantly used as an industrial metal.

However, as the rate hike conundrum left all the dollar-denominated assets depressed, this was also the case for silver. The added weakness in the industrial sector gave support to the silver market bears.

The uprooting of the China’s economic stability due to its devaluation of the yuan certainly impacted gold and silver and temporarily pushed the prices up. The hike did not last long, and the metals resumed their decline.

The devaluation of the yuan likely gave an outlook for future demand cuts for silver. As China is a giant market for raw materials and metal, the outlook remained dim for industrial metals, including silver.

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High and low levels

Silver futures touched the year’s peak of $18.34 per ounce on January 22, the same day that gold reached its high in 2015. After reaching the high for 2015, silver prices embarked on a roller-coaster ride. Silver price movement seemed to be comparatively more volatile than gold for 2015. The interest rate hike decision that came on December 17 also further pushed silver prices to the lowest level in 2015, touching $13.66 per ounce.

The fall in silver was also replicated by the Global X Silver Miners ETF (SIL) and the leveraged Proshares Ultra Silver ETF (AGQ), which retreated 30.1% and 23.1%, respectively.

Silver mining companies Silver Wheaton Corp. (SLW), First Majestic Silver Corp. (AG), and Hecla Mining (HL) fell 35.2%, 23.9%, and 29.2%, respectively, in 2015 year-to-date.

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