Silver Enters Bear Market as Prices Slump to a Five-Month Low

  • Investors unload most silver from ETPs since December 2014
  • iShares Silver Trust investors pull $230 million this month

What's Ahead for Gold in 2017?

After outshining all other precious metals in the first nine months of the year, silver is now back in a bear market.

Prices of the metal slumped to a five-month low as the dollar rallied, making raw materials priced in the greenback more expensive for holders of other currencies. Through Tuesday, investors this month unloaded almost 384 metric tons of silver in exchange-traded funds, poised for the biggest loss since December 2014.

Silver is losing its glitter as investors shed haven assets including gold amid mounting evidence of U.S. economic resilience. An improving growth outlook bolsters the case for the Federal Reserve to raise interest rates in December, curbing the appeal of non-interest bearing precious metals. Gold futures also fell, dropping below $1,200 an ounce for the first time since February on expectations that the Fed will continue raising rates as U.S. President-elect Donald Trump boosts spending.

“Gold and silver are being hit by rising global equity markets, rising global interest rates, and the U.S. is not only looking at a December rate hike, but also multiple rate hikes after that as economic numbers come in on the strong side,” Ed Meir, an analyst at INTL FCStone Inc. in New York, said in a telephone interview. “Silver is always less liquid than gold and the more volatile of the two, and it’s going to move like this.”

Silver futures for March delivery plunged as much as 2.9 percent, before closing 1.5 percent lower at $16.485 an ounce at 1:42 p.m. on the Comex in New York. That represents a loss of more than 20 percent from a two-year closing high reached in August, meeting the common definition of a bear market.

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