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SunSirs: Chinese Precious Metal Silver Hits 10-Year Low
March 20 2020 09:01:01SunSirs(Linda)

Silver hits 10-year low

The silver in Shanghai futures market continued to decline after 3 days of limit-down, and continued to open lower on March 19. On February 24th, the price of Shanghai Silver 2006 was still running at 4,500 yuan/kg, with the lowest price of 2,857 yuan/kg today and the closing price of 2,937 yuan/kg. Futures silver fell to an unrecognizable level, comparable to US stocks in the outer disk. Spot silver prices have followed this trend.

According to the tracking data of SunSirs, the average spot silver market price on March 19 was 2,942.67 yuan/kg, which was 30.72% lower than the average monthly market price of 4247.33 yuan/kg at the beginning of the month.

List of gold and silver price trends in the past 10 years

As a precious metal with strong industrial properties, silver has recently fallen. For both precious metals, the price trend of gold and silver has become similar, but the difference between the recent rises and falls is obvious.

According to the tracking data of SunSirs, the average spot gold market price on March 19 was 331.75 yuan/g, which was 10.75% lower than the average market price at the beginning of the month at 370.75 yuan/g. Stretching the price trend (as shown in the figure below), the precious metal gold has just dropped its growth rate since last December, while the spot price of silver has fallen to its lowest price since the tracking data on September 6, 2011.

Central bank operations

List of interest rate cuts of central banks this week (incomplete statistics):

  • The Federal Reserve lowered interest rates to zero on Sunday and launched a $700 billion large-scale quantitative easing program. The Fed also cut banks' emergency loan discount rates by 125 basis points to 0.25% and extended the loan term to 90 days.
  • Jordan's central bank: cut the main interest rate by 100 basis points (for the second similar action in the last two weeks) to 2.50% to stimulate the economy.
  • Chile's central bank cut interest rates by 75 basis points to 1%.
  • The Egyptian central bank cut interest rates by 300 basis points, reducing the overnight deposit rate to 9.25%, compared to 12.25%.
  • The central bank of Poland reduced the benchmark interest rate by 50 basis points to 1%; cut the direct financing rate of banks by 100 basis points to 1.5%; and reduced the rediscount rate to 1.05%, which was previously 1.75%.
  • The Icelandic central bank lowered the benchmark interest rate by 50 basis points to 1.75.
  • Brazil's central bank: cut the benchmark interest rate by 50 basis points to 3.75%. Previously, analysts had expected it would be 4.00%.
  • Ghana's central bank lowered its benchmark interest rate from 16% to 14.5%.

Market Panic

The outbreak of overseas epidemic was superimposed on the crude black swan incident, and the tide of speculative market plunged like virus among various breeds. For example, U.S. stocks, due to their own high valuation and investment strategy convergence risk, panic resistance is weak, the bubble was corrected by the plunge.

In the precious metal category, silver has a strong industrial attribute and a weak hedging and hedging attribute. It has been significantly affected by the convergent speculative effect of panic.The market is increasingly worried about the economic slowdown, and under the circumstance that the prices of safe-haven precious metals have also moved down, it is necessary to consider the dynamic changes in the physical demand and supply of precious metals in silver; Speculative price-performance ratio in the trading market after the plunge.

Under the premise that systemic risks do not occur in the world economy, precious metals analysts from SunSirs believe that with the market expectationswill be stable and panic will dissipate, the investment demand for precious metals will usher in a new climax under the loose monetary policies of various countries.

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