Physical sales gear up
Silver dropped by 11.8% in 2015. Gold prices also retreated, by a whopping 10.8% from the year prior. Though the plunging prices left precious metal lovers in dismay, they certainly raised demand in the market. US Mint silver coin sales hit a record high in 2015. Silver American Eagle coins hit 47 million ounces, while gold coin sales rose 53% and touched 801,500 ounces.
Falling prices lure precious metal fans, resulting in higher physical demand. Silver futures for March 2016 expiry were trading below their 20- and 100-day moving average prices. The fall below these critical marks could suggest a possible bounceback in price or a short-term downward trend with good chances of a bounceback. Though precious metals fall for various reasons, the primary factor is the US dollar. When the US dollar flexes its muscles, dollar-denominated commodities and metals go weak at the knees.
The above chart shows the price performance of the iShares Silver Trust ETF (SLV), which closely follows silver. It replicated the losses in silver, as did silver-based mining companies such as First Majestic Silver (AG), Silver Wheaton (SLW), and Pan American Silver (PAAS). These three companies together make up 7.1% of the price fluctuations in the VanEck Vectors Gold Miners ETF (GDX). The Global X Silver Miners ETF (SIL) also follows the trend in silver prices.