Background on Silver and Its Relationship with the Dollar
Silver, like gold, traditionally has an inverse relationship with the US dollar. This means that as the value of the dollar decreases, silver’s price tends to rise. This relationship is crucial for understanding the recent surge in silver prices.
Experts’ Perspectives
Amin Vera, the financial director of Invala Family Office, highlighted that silver has benefited from an unexpected drop in the dollar’s value to 19.5 per dollar and Standard & Poor’s upgrading Peñoles’ credit outlook from negative to stable.
Jacobo Rodríguez, a stock market analyst at Roga Capital, explained that the overall weakness of the dollar has led to increases in certain metals and minerals, including silver. He mentioned that Industrias Peñoles, a company closely tied to silver prices, has seen growth as well.
Silver Price Surge and Its Impact
On Thursday, silver futures rose by 3.60%, reaching a price of $35.89 per ounce, marking its highest level since April 29, 2011, when it was valued at $48.59 per ounce. Year-to-date, silver has seen a 22.30% increase.
Market participants’ nervousness due to escalating trade tensions, rising tariffs, and economic uncertainty has weakened the dollar. Consequently, silver has become more attractive to investors.
Silver-Related Stocks Perform Well
Shares of mining companies listed on the Mexican Stock Exchange (BMV), such as Industrias Peñoles owned by Grupo BAL, have shown significant gains due to the rise in silver prices.
- Peñoles’ stocks increased by 10.16% to 465.99 pesos per unit, reaching a historical high.
- Fresnillo, Peñoles’ subsidiary listed on the London Stock Exchange, also experienced a 4.99% rise, trading at 13.25 pounds per share.
These gains come despite the tariff increases imposed by US President Donald Trump on steel and aluminum imports, ranging from 25% to 50%. This has negatively affected investor sentiment in the metal sector.
Key Questions and Answers
- What is the relationship between silver and the US dollar? Silver and the US dollar traditionally have an inverse relationship, meaning that as the value of the dollar decreases, silver’s price tends to rise.
- Why has silver’s price increased recently? Silver’s price has surged due to trade tensions, rising tariffs, and economic uncertainty weakening the US dollar. Additionally, factors like Standard & Poor’s upgrading Peñoles’ credit outlook have contributed to the rise.
- How have mining companies been affected by this silver price surge? Mining companies, such as Industrias Peñoles and Fresnillo, have seen their stock prices increase significantly due to the rise in silver prices.
