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With inflation on the rise, supply chains continuing to be pressured, and valuations in nosebleed territory, it’s no surprise that the market has softened these developments. However, while higher inflation and negative real rates are good for precious metals, silver seems to be at mercy to the general markets temporarily. Let’s take a closer look below:
As noted above, we’ve seen an increase in volatility in the markets this week, and it’s put a major dent in the silver price, which is down more than 4% for the month after starting the month up 3%. This has the silver/gold ratio teetering on a major support level (weekly moving average), and the key will be keeping the gold/silver ratio below 80 to prevent further weakness. Generally, the best time to own silver miners and precious metals are when silver is outperforming gold, and while this is the case, a lower low or break of this moving average (white line) would not be ideal.
