Silver price beaten down but investors can't find any, so what’s going on? Peter Hug Responds
Silver's future is bleak as a recession could wipe out any industrial demand left for the metal, this according to Peter Hug, global trading director of Kitco Metals.
Monetary policy was not enough to calm investors, Hug noted, as markets reacted negatively to the last Federal Reserve rate cut made last Sunday.
"That episode really scared the market. It indicated that the Fed pushing on a string here is not going to solve the issue. It's going to require some significant fiscal policy," he said.
Hug said that a recession may now be underway.
"Ignoring the economics of a significant recession - it may be short lived, if we're not already in it – if we ignore the economics of it, silver [is] an industrial metal and there would be virtually no demand for it," he said.
Hug said that the recent price decline in metals is due to traders and investors liquidating their metals to meet margin calls, putting even more pressure on the physical market.
"Because there is no physical metal in the market right now, both the U.S. Mint and the Canadian Mint are on allocation with some products anywhere from four to six weeks out, at a minimu, we're looking at a situation where there isn't enough physical offtake to offset the selling of the ETFs and the futures, because there's no physical product left to buy," he said.
Spot silver traded 20 cents higher on the day Tuesday.