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The Weak Greenback Is Keeping SLV Up

Summary

The silver market cooled down over the past couple of weeks, but SLV is still up for the year.

The depreciation of the U.S. dollar is keeping up the price of SLV.

The demand for silver is expected to pass total supply, but this won't be enough to keep driving up SLV prices.

The price of silver and iShares Silver Trust (NYSEARCA:SLV) declined over the past couple of weeks, but SLV is still up by nearly 9%, year to date. The latest robust non-farm payroll report was enough to bring down the price of SLV as the report raised the chances of rate hike by the Fed. Nonetheless, the market still expects, at best, one rate hike this year. And Yellen's recent talk reaffirmed that the Fed is likely to move very slowly in raising rates. For now, the weak U.S. dollar is enough to keep SLV up. And while the silver market is expected to be in a deficit this year (supply will be higher than the demand), this isn't likely to play a significant role in moving the price of SLV.

The dollar and SLV

One of the main factors that boosted the price of SLV is the depreciation of the U.S. dollar over the last couple of months. Chair of the FOMC Janet Yellen gave another dovish speech last week. And the mere hint of the FOMC maintaining its rates unchanged was enough to push down the U.S. dollar, as indicated in the following chart showing the relation between SLV and the trade weighted U.S...


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