Silver kicked off the first week of July on a positive note, up 1.15%, with silver funds gaining +1.21% despite near-zero flows.
And yet silver has underperformed gold to date this year. It’s lackluster performance can be attributed to multiple factors, including the adverse impact of rising yields in the U.S., along with the industrial considerations inherent with this precious metal.
As with all metals closely tied to economic activity and business cycles, silver has been adversely affected by the market downgrade in growth forecasts, which has subsequently dampened the demand for metals. Moreover, China's recovery has proven to be slower and more complex than originally anticipated - after a brief acceleration in March, economic activity has shown signs of weakening.
These factors, coupled with expectations of a slowdown in developed countries, have prompted investors to shed metals in the derivatives markets. Nonetheless, despite physical demand being slow to rebound, there are indications that Chinese manufacturers have depleted a significant portion of their domestic inventories. As a result, any additional demand would inevitably translate into purchases in the international market, potentially bolstering prices.
Group Data CAD
Funds Specific Data CAD: SVR, SBT.B, HUZ
This content was originally published by our partners at the Canadian ETF Marketplace.