Silver Prices Plunge to Three-Month Lows

Silver coinSilver prices crashed to three month lows on Tuesday, as rumors of the European Central Bank tapering its massive bond purchases roiled the precious metals markets.

Silver futures were down more than 5% in afternoon trading, as silver’s per-ounce price dropped $18 for the first time since before the Brexit crisis. Following yesterday’s pullback, this marks the largest one- and two-day drop since January of 2015.

Gold prices also pulled back sharply, down more than 3%, exacerbating silver’s decline.

Physical demand may also be drying up for precious metals. According to Thomson Reuters GFMS, net sales volumes to retail investors in the U.S. of gold and silver coins and bars fell between 40% and 50% in the third quarter. This trend is in direct contrast to paper exposure trends, as the SLV saw record inflows during the third quarter.

Silver ETFs are being hit hard as well, with silver miners leading the downturn. The SIL and SILJ were both off close to 10% in afternoon trading.

Precious metals had enjoyed tremendous rally in the first half of 2016, but their shine has waned over the past few months. Once prices began to consolidate, as you can see in the SLV chart below, metals became very vulnerable to sharp pullbacks.

SLV-2016-10-04

The iShares Silver Trust ETF (NYSE:SLV) fell $0.99 (-5.54%) to $16.88 in afternoon trading Tuesday. Year-to-date, the largest exchange traded fund tracking the spot price of silver has still gained 28%, but is well off its yearly highs of $19.71.

Investors can follow today’s full price carnage in the sector by checking our Precious Metals ETFs category page.