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Why silver prices are down today, Aug. 18: Silver prices took a sharp plunge today (Tuesday) after Chinese stocks saw their steepest sell-off in nearly a month.
At 1:30 p.m. this afternoon, the silver price was down 3.22% and trading at $14.81 per 5,000 troy ounces – the amount traded on each futures contract equal to about 155,000 grams. Silver futures have gained 0.4% in August but have fallen 3.4% in the last week alone.
The main reason why silver prices are down today is China's struggling stock market. The country's benchmark Shanghai Composite Index cratered 6.2% this morning, marking the index's biggest one-day decline since falling 8.5% on July 27. The drop came one week after China devalued its yuan currency in a desperate attempt to reinvigorate the country's exports.
Like most other commodities, silver is traded in U.S. dollars. That means the metal becomes more expensive for Chinese buyers when the dollar is stronger than the yuan.
"Concerns that China's stock market rout could destabilize its economy in transition and impact resource demand continues to drag on commodities," said Colin Cieszynski, chief market strategist at CMC Markets, in a note.
Unfortunately, silver prices may head lower due to the extreme volatility in Chinese markets. The same goes for gold prices, which are down 5.9% this year.
But according to Money Morning Resource Specialist Peter Krauth, silver is headed for a strong rebound over the next six to 12 months thanks to its increasing industrial demand.
"Thanks to silver's distinctive properties like malleability, ductility, conductivity, light reflectance, and antibacterial attributes, silver is often difficult, if not impossible to substitute," Krauth explained.
"New applications for silver are discovered almost daily, contributing to ever-higher consumption."
Last month, Krauth explained how silver still has value to your portfolio despite its cheap price. Here are three "Buy" signals to look for when considering investing in silver…
Alex McGuire is an associate editor for Money Morning who writes about commodities such as silver, oil, and natural gas. Follow him on Twitter at @AlexMcGuire92 for the biggest commodity updates.
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"The main reason why silver prices are down today is China's struggling stock market. " haha what a joke !!! :D China is struggling already for a few months… Sorry but its silly statement
This article is bogus.. Chinese stock market down so silver down it says.. Then makes the point that since silver is priced in USD it makes it more difficult for people in other markets to buy it due to rise in USD. Seems to make sense but wait just a second.. How many investors do you know buy into something when the price is falling? We all like to think we are great investors but most investors buy on the way up. So if silver is increasing in Yuan terms, Chinese demand should be increasing not decreasing.
The Real Reason Silver Prices Are Down is Because The Banks are Trading an average of 9,000,000 Contracts a day or 1.4 million tons. Considering there is only about 750,000 tons available I find it repulsive that they actually get away with selling something that doesn't exist
I am still very bullish on Silver. Call me a conspiracy theorist if you like but when the Fed prints "fiat currency" like toilet paper and the whole world has that same toilet paper as its global reserve, it would seem like the manipulation is from within the Fed or other unseen spooks.
If the USD ends like fiat currencies have in history, the masses will always run to Gold and Silver. Like what Dirk said, the people within the banks selling contracts on metals that don't exist, to me, are basic committing fraud. They should be put in prison.
Excellent point but why is nothing being done about it? Obama could care less, he's following the money trail! So we average investors get screwed! Believe what Forbes Magazine says!