Global silver prices plunge again… “Industrial demand sharply down”

Commodities Focus

Global silver prices plunged again. According to London Stock Exchange Group on the 5th, spot silver at one point in the morning fell about 17% from the previous session to the $73-per-troy-ounce range. It later rebounded to the $75-per-troy-ounce range. Silver futures also slid at one point to the $73 range.

After surging more than 150% last year, silver futures on the 30th of last month tumbled more than 30%, marking the biggest one-day drop in 46 years since March 1980. The selloff was driven by a growing focus on the fact that Kevin Warsh, the US central bank (Fed) chair nominee, is the most hawkish (prefers monetary tightening) among the shortlist of candidates.

Silver prices stayed weak through the 2nd, then rebounded on the 3rd and 4th on bargain buying, but fell sharply again on the day. Christopher Wong, a strategist at Singapore-based Oversea-Chinese Banking Corporation, said, “Investor sentiment appears to have weakened across asset classes including equities and metals,” adding, “With liquidity constrained, a vicious cycle of amplified declines is repeating itself.”

Kunal Shah, head of research at Indian commodities-focused financial firm Nirmal Bang Commodities, said, “Industrial demand for silver has fallen (sharply) due to high prices,” adding, “Most industrial buyers have stopped purchasing silver, and even Chinese solar-panel manufacturers are looking for substitutes.”

By Kim Joo-wan, kjwan@hankyung.com