Shares of SLV plunged 7.2% to $63.74 on Thursday as a triple threat — scorching inflation data, climbing Treasury yields, and a Fed in no hurry to cut rates — hammered the case for holding an asset that pays no interest or dividends. The selloff extends a brutal week that has erased 16.7% of SLV's value since March 12, when it traded at $76.48.
• Wholesale Prices Came in More Than Twice as Hot as Expected
The Producer Price Index rose 0.7% in February, more than double economists' expectations of 0.3%.
It was the biggest increase in producer prices in seven months, with goods prices soaring 1.1%.
On an annual basis, headline producer inflation jumped to 3.4%, the highest in a year. For silver holders, rising wholesale prices signal that consumer inflation hasn't been tamed — making it harder for the Fed to justify cutting rates, which is the single biggest catalyst silver bulls are counting on.
• The Fed Signaled Only One Rate Cut This Year — And Even That Isn't Guaranteed
The FOMC voted 11-1 to hold rates at 3.50%–3.75%.
The closely watched "dot plot" pointed to just one reduction this year.
Chair Powell "pushed back on the idea of near-term rate cuts and sounded a bit more hawkish regarding the outlook for inflation." Silver doesn't generate income, so when government bonds yield more, investors have less reason to own it. Every month rates stay elevated is another month silver carries an opportunity cost.
• Treasury Yields Rose, Tightening the Squeeze on Non-Yielding Assets
The benchmark 10-year Treasury yield traded up more than 6 basis points to 4.265%.
The 10-year yield has climbed from 3.96% at the end of February to as high as 4.26% — a 30-basis-point jump in under three weeks. Higher yields make Treasurys more attractive relative to silver, draining money from precious metals ETFs.
• The Iran War and Oil Add a Wild Card That Cuts Both Ways
Oil has been trading around $100 a barrel, up more than 70% year to date as the Middle East conflict persists. Unlike its usual safe-haven appeal, silver came under strong pressure due to a weak industrial outlook and currency movements. Higher energy costs threaten to slow manufacturing — silver's biggest demand source outside investment — while simultaneously feeding inflation that keeps the Fed on hold. Silver's trajectory hinges on supply deficits projected for a sixth year, alongside escalating industrial fabrication nearing 650 million ounces. If a recession materializes, that industrial demand story collapses, and SLV holders are left exposed.