Recently, the silver rally won applause. But was it really an encore?
SILVER SEDIMENT
"Sediment is solid material that is moved and deposited in a new location. Sediment can consist of rocks and minerals" and "matter that settles to the bottom."
The silver price closed on Friday at $22.30 oz., down $1.15 from its closing price the day before.
What is worse, though, is that it follows a drop of $.50 oz. on Thursday. And, on both Thursday and Friday, the silver price collapsed early in the day, found the bottom level and stayed there.
From its intraday peak on Thursday morning in New York to the closing price Friday, silver declined $2.30 oz., or more than nine percent.
ENCORE FOR SILVER
Recently we have heard a chorus of calls for higher silver prices. Most of the enthusiasm for these grand proclamations came after silver had rallied more than thirty percent from its low last fall.
Yes, that is a sizable increase; and it piqued investor interests. But it wasn't an encore. It was just a repeat performance.
Less than one year ago, silver was sitting at $26.00 oz and and we were hearing similar cries then, too. Yet, within a few months thereafter, silver was down to $18.00 oz.
Before that the loudest calls came in early 2021 and the summer of 2020. On those occasions the silver price was trying to break $30 oz. on the upside. It didn't; and the rest is history.
SILVER CHARTS, ETC.
Below is a chart which depicts the silver price action discussed above.
Silver Prices August 2020-February 2023
The progression of lower highs and lower lows is very clear. And that trend is evident in the chart below, too, which covers a longer period of time...
Silver Prices April 2011-February 2023
With the current silver price of $22.30 at less than half its April 2011 peak price of $48.70 oz., there is a big gap between the actual price performance of silver and the expectations based on what has been told, sold, and promoted.
The poor price performance of silver is amplified when considering the effects of inflation. In doing so, the April 2011 peak price of $48.70 becomes $64.15. This means that in real dollars the silver price today is sixty-five percent lower than it was at its peak twelve years ago.
CONCLUSION
Regardless of the hype and contrary to the false fundamentals presented in its defense, silver continues to sink to the bottom, both in nominal and real terms.
Don't look for any lasting increase in the silver price anytime soon; especially from prices over $20 oz. (see Silver's Bad Break and Inflation Is Killing Silver)
Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN'T, AND WHO'S RESPONSIBLE FOR IT and ALL HAIL THE FED!
Kelsey Williams
Precious Metals Analyst