Can silver price deliver in 2020? – by Anna Golubova (Kitco News – March 31, 2020)

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(Kitco News) With gold back on the radar for a lot of investors, attention is now turning to silver but can it deliver alluring returns this year? Prior to the March sell-off, silver was doing well as a precious metals hedge, but its industrial component has been weighing it down.

“Both gold and silver have monetary safe-haven qualities, unlike most commodities, which historically sell-off during periods of equity market weakness and/or heightened concerns regarding the health of the global economy,” said Jordan Eliseo, senior investment manager at The Perth Mint. “Concerns about the state of the global economy will have possible negative consequences for the industrial metals, and by extension, silver.”

Panic mass sell-off triggered by COVID-19 dragged silver prices to 11-year lows just a couple of weeks ago. Since then, the precious metal has recovered somewhat. Spot silver last traded at $13.96, down 0.43% on the day while May silver Comex prices were last at $14.195, up 0.45% on the day.

“The sell-off was driven by a paradoxically negative macro environment for silver, as evident in a spike in USD and U.S. real rates amid the Fed’s failure to reassure the markets,” said Orchid Research in a Seeking Alpha post.

“Don’t get us wrong, though, silver’s industrial demand is presently in a precarious state considering that the global economy is paralyzed. Yet, we believe that the chief driver of the silver sell-off was the negative macro-environment.”

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