31 Dec

Silver Took the Same Price Path as Gold in 2015

WRITTEN BY Meera Shawn FEATURED IN Macroeconomic Analysis

Silver followed gold

Gold has lost its appeal among investors due to the conundrum of the interest rate hike. The strength of Treasuries once interest rates go up from the zero level makes gold weak. The interest rate went up to 0.25% after the last FOMC (Federal Open Market Committee) meeting of 2015. Gold investors had feared a rate hike, as gold doesn’t bear interest and a rate hike causes the value of gold to fall. Silver and the other precious metals such as platinum and palladium have also fallen, taking the same route as gold.

Gold and silver fell 10.5% and 12.1%, respectively, in 2015. Unlike gold, silver is an industrial metal, and the much-spoken-of silver deficits could have easily buoyed silver and saved it from falling in 2015. However, that was not the case, and silver followed gold for its price direction.

Silver Took the Same Price Path as Gold in 2015

Mining stocks

In 2015, silver peaked at $18.30 per ounce and hit a low of $13.60 per ounce. The fall in silver and gold prices also spread to ETFs such as the iShares Silver Trust (SLV) and the Sprott Gold Miners ETF (SGDM). These two funds have fallen 12.3% and 27.9%, respectively, in 2015. Both have also faced losses on a 30-day trailing basis, falling 1.7% and 2.4%, respectively.

Mining-based companies that could buoy precious metals include Agnico Eagle Mines (AEM), Alacer Gold (ASR), and Centerra Gold (CG). These three companies have risen 5.3%, 6.4%, and 8.1%, respectively. However, they didn’t boost the VanEck Vectors Gold Miners ETF (GDX). GDX fell 25.7% in 2015. The three companies together contribute 7.2% to the price changes in GDX.

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