What Silver Is Saying
By Ira Iosebashvili, markets reporter
A relentless fall in the price of silver and other metals is troubling investors, who believe the drop may augur a bout of weakness in the global economy.
Silver prices hit their lowest level since early 2016 on Tuesday bringing its year-to-date decline to 18%. Prices for the metal lost some 6.9% in August alone, even as the dollar declined. Normally, a weaker dollar tends to buoy commodities, which are denominated in the U.S. currency and become more expensive to foreign buyers when the dollar rises.
Silver's slide is a worrying development for some market participants, who are concerned that its falling price signals weaker global manufacturing. Although classified as a precious metal, silver is used in a broad range of industrial applications, from electronics to jet engine manufacturing, making it sensitive to global economic currents.
The decline is part of a broader selloff in metals that has come amid an intensifying trade conflict between the U.S. and China and turbulence in emerging markets. Copper prices are down 21% this year, while gold has lost 8.7%.
At the same time, silver has been buffeted by a climb in the U.S. dollar that has pressured prices for most commodities, with the exception of oil. The WSJ Dollar Index, which measures the U.S. currency against a basket of 16 others, is up 4.7% this year.
And while investors sometimes gravitate toward silver and gold when markets turn rocky, the dollar's rally has lately discouraged them from buying metals, instead steering some toward other popular havens, such as the Swiss franc and Japanese yen.
"Silver prices are getting hit from two sides," said George Gero, managing director at RBC Capital Markets. "Buyers and bargain hunters are looking for lower prices to reenter the market. But not at these levels."
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