Silver is down more than half from its peak: bargain or value trap?

Silver took the bigger hit from Tuesday’s hot inflation report. Spot silver was near $51.41 an ounce in late US trading, down $1.894 or 3.55%, Kitco reports, while gold fell 2.60%. CNBC had silver back up 1.7% at $52.38 early on Wednesday, and FXEmpire reported a rebound to about $52.45.

From the record to the low

Silver’s spot price touched about $121.6 on 29 January; the front-month Comex contract’s record settlement was $115.08 on 26 January, Dow Jones Market Data reported (the difference is explained in Silver at half its January peak). At $51.41, spot silver is about 58% below that intraday high by our arithmetic. Heraeus said in a note reported by Kitco on 9 November that silver had set a 2026 low just under $49 before rebounding above $52.

A Comex settlement for Tuesday, and the year-to-date change, were reported by Dow Jones Market Data via Morningstar, but that page refused automated access, so we have left those figures out.

Why silver falls harder than gold

On Tuesday silver fell about 1.4 times as far as gold in percentage terms. That pattern is usual when rate expectations jump. Silver’s market is much smaller, so the same flows move it further. It also has an industrial side that gold lacks, so it suffers when growth looks weaker as well as when rates look higher. Both pressures were present this week. Why silver falls harder than gold goes through the mechanics.

By our division, Tuesday’s Kitco prices put the gold/silver ratio at about 78, meaning an ounce of gold bought about 78 ounces of silver. The ratio page tracks it.

China’s factories

FXEmpire notes that China’s official manufacturing PMI dropped to 49.3 from 50.1, which suggests weaker factory activity. A reading below 50 means activity is contracting. For a metal whose demand is mostly industrial, that matters more than it does for gold. Whether lower industrial demand turns silver’s deficit into a surplus is argued in Is the silver deficit story over?.

The levels analysts name

These are FXEmpire’s reference points, not ours. It sees strong support in the area from $48 to $50, with $45 below that, and resistance from $55 to $56. “A break above $55 could lift silver towards $60,” it says, where the 50-day moving average sits. Kitco’s levels are tighter: support at $51.27 and $51.00, resistance at $53.42 and $54.64.

Bargain or value trap?

A large fall does not make something cheap. The price fell because the reasons to own silver weakened: real rates went up, and industrial demand looks softer. It would look like a bargain if those causes reversed, and a value trap if they did not. Last week’s rebound to $53 ended at the CPI report, which shows how much depends on the Fed. Friday’s producer prices and the December meeting are the next tests.

This site does not forecast prices, and nothing here is advice. The current figure is on the silver price page.

Every figure here is as reported by the publications listed under Sources, at the time they reported it. Prices move; the live gold price has the current one. Nothing on this page is investment advice.