Silver has had a difficult period recently as concerns about the strong US dollar and a recession remains. The DXY (US dollar index) has jumped sharply as the Federal Reserve has embraced a more hawkish policy. The Fed has already hiked interest rates by 150 basis points and hinted that more hikes are coming.
Other central banks have also moved to tighten conditions. For example, the Bank of England has hiked rates in the past five straight meetings. The Swiss National Bank hiked interest rates for the first time in more than a decade. Therefore, these policies have pushed more analysts to price in a slow and painful recession and stagflation.
Meanwhile, the silver price has dropped as investors continue dumping silver funds. According to Bloomberg, gold-backed ETFs dropped by 1% in the second quarter. In the same period, silver ETFs tumbled by about 5%. An analyst told Bloomberg: “If market recession fears are increasing, you prefer to hold exposure to gold and not to the white metals, which have a high industrial usage.”
Meanwhile, the closely watched gold/silver ratio has been in a strong bullish trend and is currently trading at $91.23, which was the highest point since June 2020. This means that an ounce of gold is currently valued at over 91 ounces of silver.
The key catalyst for the silver price this week will be the upcoming American jobs data. Analysts expect these numbers to reveal that the labor market slowed in June as confidence dropped. Still, these numbers will likely not have an impact on the Federal Reserve.
Silver Short (Sell)
Enter at: 18.996