On 31st Jan we have released an opinion piece “Silver the pattern 1980-2011-2026 repeats again”. Silver was then trading around $85 levels. Friday’s close was around $67. Last week’s ferocious fall in both gold (10% WoW) and silver (15% WoW) has convinced us that we are headed lower for longer in precious metals. Gold’s pullback reflects a combination of profit-taking and liquidation amid concerns about less monetary easing. Slower central bank buying and outflows from exchange-traded funds have further weighed on sentiment. Bullion-backed ETFs are set for a third week of outflows, with holdings falling more than 60 tons in that period. With markets pricing in rate hikes across DMs, non interest bearing assets such as precious metals might fall further. Hence Gold might see more selling, and we expect a test of $4000 levels sooner than later. It is now a sell on rise market rather than a buy on dip kind of market. Silver might fare worse than Gold in the current downturn because silver is heavily used in industrial applications. Upwards of 60% of silver demand is industrial: electronics, AI chip packaging, solar panels, electric vehicle wiring, semiconductor conductivity, data centre contacts. When global growth slows down, silver demand also goes down. Also with the global paucity of Helium which is used in chip fabrication (wafer cooling, vacuum environments, lithography stability, leak detection) due to Qatar's Ras Laffan complex being hit (it supplied 30% of global helium supply), it is a matter of weeks before current stock of Helium runs out and chip production also starts falling leading to further lower demand for Silver. Hence we expect the current sell off to continue in both Gold & Silver with Gold eventually testing $4000 levels & Silver $50 levels. With central banks staying away from Gold & Silver being battered due to global growth slowdown, it is the retail crowd which might now be stuck for years with their purchases bought at far higher levels. This has been the story of precious metals since many decades as seen in 1980, 2011 and now 2026.
