Why the Relationship between the Silver Spot Price and Physical Silver is

The silver spot price has taken a beating lately, falling from more than $40 an ounce to less than $30 an ounce in a matter of two weeks in late September. The precipitous fall was due in large part to an inevitable correction on silver prices. But what made things worse was the dual margin rate increases by the CME futures exchange (21% hike) and the Shanghai Gold Exchange (20%) around that time.

But as Eric Sprott of Sprott Asset Management notes in a letter titled “Silver Producers: A Call to Action”, nothing about the physical silver market has changed. According to Sprott, the notion that physical silver should be priced based on futures contracts is “laughable.” The volatility in silver spot pricing, Sprott says, is needless considering the market for silver has never been stronger.

To read Sprott Management’s full article on silver, click here.