The price of silver continued to decline last week. Since the beginning of the month, silver lost 5% of its value. The changes in the foreign exchange market or gold seem to have little impact on silver. What could keep dragging down silver?
Last week, silver lost 0.7%. The silver ETF iShares Silver Trust (SLV) fell by 0.9%. Further, major silver related companies such as Silver Wheaton (SLW) and Pan American Silver (PAAS) dropped last week by 2.7% and 0.9%, respectively.
The main event from last week was the Jackson Hole symposium. There were no surprise from Yellen in here speech. She said there is still slack in the labor market. Nonetheless, she still left the door open for a rate hike at sooner than anticipated timing:
“But if progress in the labor market continues to be more rapid than anticipated by the Committee or if inflation moves up more rapidly than anticipated, resulting in faster convergence toward our dual objectives, then increases in the federal funds rate target could come sooner than the Committee currently expects and could be more rapid thereafter”.
This wording isn’t new but still leaves the possibility that FOMC may raise rates by the first quarter of 2015. The next FOMC meeting next month could offer some more information on this issue. Until then we should take note of the weakening of the relation between gold and silver.
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