Silver Price Crash Not Over Yet: Analyst Warns of $40 Next

The silver price has not had an easy time over the past months. Following a rise above $120 per ounce in early months, silver now trades under $60, its lowest level in some seven months, and leaves investors questioning whether the correction is nearing its end or whether there is more room left for falling prices.

According to market expert Alex Mason, the answer is quite obvious. According to him, silver repeats the previous pattern following the famous 2011 top and his chart shows that one more target awaits at $40 per ounce.

Why the Silver Price Keeps Sliding

There are several reasons the silver price has struggled. The biggest one is the broader economic picture. Rising value of the U.S. dollar and above expectations core PCE inflation figures raised expectations that the Federal Reserve would maintain its interest rates at high levels.

Higher interest rates normally lead to declines in prices of precious metals since silver is not an income-producing commodity. An increase in the value of the dollar also raises the cost of silver for investors using other currencies to buy it.

Demand for silver from industrial users is yet another variable affecting silver price movements. Silver is used extensively in production of solar panels, automobiles, semiconductors, and electronics.

Investor sentiment has also weighed on the silver price. Even though precious metals are often viewed as safe-haven assets, investors don’t always rush into silver during uncertain times. Many choose to park their money in cash or higher-yielding investments instead.

The Silver Chart Still Looks Weak

We had a look at the silver chart shared by Alex Mason, and it’s easy to see why he’s staying bearish. His chart tracks the move from above $120 down into the $89 to $96 area before projecting another decline toward $58 and eventually $40. 

The chart continues to show lower highs and lower lows, which means sellers remain in control. Mason compares the setup to the silver collapse that followed the 2011 rally. In that cycle, prices climbed rapidly before entering a prolonged decline as leverage unwound and buyers stepped aside.

He also points out that several important support levels have already failed. Unless the silver price starts reclaiming those levels, the broader trend remains pointed lower.

What Could Move the Silver Price Next?

The next move for the silver price will probably be determined by a number of key economic events. In case there is persistently high inflation and the Fed continues with its policy of maintaining high interest rates, silver can be pressured further.

Industrial demand will also stay in focus. Strong activity from the solar energy and electric vehicle industries could help stabilize prices because both sectors consume large amounts of silver. At the same time, weaker manufacturing data could reduce demand and extend the correction.

Global uncertainty is another factor worth watching. Precious metals often attract buyers during periods of geopolitical tension, although broad market selloffs sometimes force investors to liquidate commodities alongside other assets.

Can the Silver Price Really Reach $40?

A drop to $40 would require another major leg lower from today’s levels, but Mason believes that outcome remains possible if the current pattern continues.

However, that might need high-interest rates to prevail, the strong USD to persist and demand from industry to weaken even more. In contrast, good economic performance and strong physical demand could slow down the fall of silver below that level.

For now, the technical picture still favours the bears. The silver price has yet to show a convincing reversal, and many traders will be watching closely to see whether support begins to hold or whether Mason’s $40 forecast moves one step closer to reality.

FAQs

Is silver still a good investment during inflation

Silver has historically been used as an inflation hedge, but its price is also influenced by interest rates and industrial demand. Inflation alone does not guarantee higher silver prices.

Why does the U.S. dollar affect the silver price

Silver is priced in U.S. dollars globally. When the dollar strengthens, silver becomes more expensive for buyers using other currencies, which can reduce demand.