The price of iShares Silver Trust (SLV) fell again by 1.6%. The recovery of SLV remains questionable anytime soon as the U.S. economy keeps showing signs of recovery and the FOMC is slowly setting the ground work for a rate hike, which could put another blow for silver. Let’s take a closer look at the progress of the U.S. economy, examine what’s next for the FOMC and the relation to SLV.
Is the U.S. economy doing better?
The U.S. economy has improved in the past few quarters, albeit it has yet to return to its pre crisis levels (before the recent economic meltdown); let’s examine the U.S. GDP per capita.
Between 2012 and 2014 the average annual growth rate (per quarter) was around 1.6% — back in 2000-2006 the average growth rate was 1.8% and in the second half of the 90s this figure was 2.8%. Conversely, during 2010-2011 the average rise in GDP per capita was only 1.3%. So the growth rate has picked up, but it still has more room to improve.
The progress of the U.S. economy is one factor that influences SLV investors whether or not to hold on to their investment. As the U.S. economy recovers, the demand for silver on paper tends to diminish as it did back in 2013-2014.
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