Silver prices fell below $89.50 after reaching a high of $93.90, mainly because of reduced demand for safe-haven assets. This drop happened as geopolitical concerns eased. US President Trump also mentioned that no mass executions in Iran were expected. The price of silver was also pushed down by strong US Producer Price Index (PPI) and Retail Sales reports. These reports indicated that the Federal Reserve might keep interest rates steady. Furthermore, Trump’s choice to not impose new tariffs on essential minerals lowered trade tensions and affected silver demand. In November, US Retail Sales rose by 0.6% to $735.9 billion, beating predictions of a 0.4% increase. Rising consumer prices impacted silver’s appeal since it doesn’t earn interest. Federal Reserve Chair Jerome Powell expressed concerns about potential pressure on the administration to adopt a more relaxed monetary policy. Despite recent dips, silver remains an attractive investment due to its historical significance and potential as a hedge against inflation and political unrest. Its demand in industries like electronics and solar energy can lead to price changes, influenced also by gold prices. The Gold/Silver ratio is a useful tool to compare the values of these two metals. We saw silver prices retreat from last year’s record high of $93.90 as fears about Iran diminished and new tariffs on minerals were avoided. This decline in safe-haven interest has continued into the new year, with prices stabilizing around $85.00. The extreme price fluctuations seen in the fourth quarter of 2025 have calmed down. Recent US economic data supports trends from last November, confirming strong PPI and retail sales figures. The Consumer Price Index (CPI) for December stood at a stubborn 2.8%. This data reinforces the Federal Reserve’s decision to keep interest rates steady well into this year. High interest rates and a strong dollar are still challenges for non-yielding assets like silver. For traders, the drop in implied volatility from late 2025 presents an opportunity to sell options on silver. With prices now within a clearer range, strategies like writing covered calls or selling cash-secured puts at key support levels could provide profits. The market is not predicting the wild daily price swings we experienced last year. Despite the recent price decline, the long-term demand for silver in industry is robust, providing a strong support level for prices. Recent forecasts from the International Energy Agency predict a 15% rise in global solar panel installations in 2026, which heavily depend on silver. This trend suggests that purchasing long-dated call options to leverage this underlying demand may be a smart move in the coming months. We should keep an eye on the gold-to-silver ratio, which has widened back to 68:1 after tightening during silver’s surge last year. Historically, a ratio above 70 often indicates that silver is undervalued compared to gold. This could present a trading opportunity to buy silver and sell gold futures, betting on the ratio to narrow again.

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