What’s Next for Silver?

The price of silver resumed its downward trend during last week mainly on Friday. What’s next for the silver market? Let’s analyze the recent news that may affect silver (SLV).

The decline of the price of silver has reflected in the drop in demand for silver ETFs such as iShares Silver Trust. During the previous week, the Silver Trust’s price fell by 1.3%. Silver related investments such as Silver Wheaton (SLW) also declined by 1.4% during the previous week. Looking forward, the progress of the U.S economy, the changes in demand for silver in Asia, and the direction of the U.S dollar could be among the factors affecting the silver market. Let’s further examine these issues.

U.S labor market and silver

Last week, the U.S non-farm payroll report was published. This time, 175,000 jobs were added during February –higher than anticipated. This report showed a higher number of jobs added than in December and January. The table below presents the changes in the price of silver, USD/Yen and the increase in employment.

As you can see above, a high increase in the number of jobs tends to be negatively correlated with the price of silver. Further, the linear correlation between the changes in employment and price of silver is -0.36, which is a mid-strong and negative correlation.

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