Why silver crashed

Despite any investor confusion at the time, as the crises wore on and investors kept buying gold and silver, the reversals were huge. The price rose over 9-fold, over a period of about four years. Like gold much of that rise occurred in the final year.

The lesson here is similar to the period. Precious metals crashed in the initial shock to the economy and markets but they rebounded spectacularly as more and more investors sought them out as a safe haven.

Those that held on, despite any confusion over the initial crash, were handsomely rewarded. The wait was worth it. From until January , the shares of Homestake Mining, the largest gold producer in the U. Part of the explanation [for that] is that miners had a guaranteed selling price since the price was government-fixed , which benefited them because their operating costs were falling….

If we pull back and look at the bigger picture, Homestake outperformed common stocks for an incredible 15 years. In global markets, gold rates slumped as much as 4. Spot gold were down 2. Silver was down down 2. Data released on Friday showed, US employers hired the most workers in nearly a year in July and continued to raise wages. The data boosted the dollar and benchmark US. Weak ETF flows also weighed on gold.

Gold has been under pressure this month on investor concern that an improving US economy and rising inflation will spur the Fed to pull back on unprecedented economic support. Meanwhile, Treasury yields are moving higher as traders bet that Fed would cut its asset purchase program in You are now subscribed to our newsletters.

Premium Premium Sectoral rotation playing out in Indian markets. How to Premium Premium Droom Technology files draft papers with Sebi to raise Premium Premium Berger beats Asian Paints on parameter which now matter Things to Know Be Premium Future told to halt asset sale process. Subscribe to Mint Newsletters. Internet Not Available. Coeur aims to turn free cash flow positive in , but that target looks more achievable in a high gold and silver price environment.

Endeavour Silver and Hecla Mining are pure-play silver mining stocks and were therefore getting knocked out by the slump in silver prices today.

Endeavour Silver's all-in sustaining cost has risen steadily in recent quarters, squeezing its margins despite rising silver prices. The miner's prospects don't look too great if silver prices continue to fall. Hecla Mining, though, has been on strong footing so far this year from an operational performance standpoint. It also pays a dividend, but investors are wary of earning smaller dividends if silver prices fall given Hecla's recently launched variable dividend policy.

Sibanye-Stillwater, on the other hand, is a unique play on gold and platinum group metals. The platinum price also fell today, but it's been falling precipitously for several weeks now largely thanks to the ongoing global semiconductor chip shortage that's clobbered global car production. Platinum group metals are widely used in exhaust control catalytic converters in cars. Lithium's use in electric vehicle batteries has made it a red hot metal with potentially explosive growth prospects.

Investing in precious metals isn't for the faint of heart given how volatile metal prices can be. Today was one such nerve-racking day for investors. But if you can stomach the volatility, look beyond short-term gyrations in stock prices, as carefully picked gold and silver stocks, when bought cheap , can prove to be great long-term investments.