Silver price plummets, Gold/Silver ratio at 100 – Commerzbank

Silver was hit even harder, losing a good 7% on Friday and plummeting to a 7-month low of USD 28.3 per troy ounce yesterday, Commerzbank's commodity analyst Carsten Fritsch notes.

Silver takes a heavy hit amid rising risk aversion

"Since last Wednesday, the drop in silver has totalled a good 16%, meaning that the silver price has fallen almost as much as oil prices. The gold/silver ratio subsequently rose above the 100 mark for the first time since mid-2020, when it was the coronavirus pandemic that put the silver price under massive pressure."

"This shows once again that silver is not a safe haven in times of sharply rising risk aversion or increasing fears of recession, but behaves like a cyclical commodity. The reason for this is the great importance of industrial demand, which has risen significantly in recent years and now accounts for almost 60% of total silver demand. Industrial demand is therefore both a blessing and a curse for silver."

"A blessing because it is strongly driven by demand for applications for the climate-neutral generation and use of energy (photovoltaics, e-mobility), a curse because it is very sensitive to the economy and becomes a negative factor in times of high risk aversion and recession fears, as is currently the case. It is therefore impossible at the moment to estimate how long the weakness in silver prices will continue."