Silver Fear & Greed Index — Market Sentiment and Analysis

The silver score draws on six technical measures. Every one is first normalised onto the shared 0-to-100 range, then weighted -- and the weights are specific to silver, since a market driven half by industry does not behave like one driven entirely by investment.

The 6 Indicators and Their Weights

Silver travels through the same five bands, but faster and further. Because it is simultaneously an industrial raw material and a monetary asset, it falls harder when economic fear takes hold and rises more sharply when confidence returns.

To see how far a sentiment reading can travel in a short time, look at silver. Nothing else moves between panic and euphoria this quickly, and the historical data illustrate the point more convincingly than any description could:

When Silver Sold Off Hardest

Silver had fallen below $18 by the summer of 2022, a price at which numerous mines were barely covering their production costs, and the index registered extreme fear. March 2020 had been briefer but sharper, with a spike below $12. On both occasions the price came close to doubling over the following twelve to eighteen months.

Squeezes and Speculative Excess

Social media took silver from $25 to above $30 in early 2021. The 2011 episode went further, approaching $50 on post-crisis inflation fear. Both ended in abrupt reversals, and both demonstrate the same rule: silver euphoria builds faster than gold euphoria and unwinds faster as well.

Silver Out of Step with Gold

Gold registering greed whilst silver sits at neutral describes a selective retreat to safety: buyers want the refuge and not the industrial exposure that comes with silver. That divergence has repeatedly preceded silver rallies, since once fear recedes and risk appetite recovers, silver has the greater distance to travel.

The contrarian argument in silver is identical to the one in gold, but considerably harder to live through. The declines run deeper and the recovery regularly takes longer than the reasoning would suggest.

Buy When There Is Fear

Silver beneath 20 usually coincides with a gold-silver ratio above 80, and the two signals together make a far stronger case than either does alone. The summer of 2022 supplied both -- silver at $18 with the index at its extreme -- and the price came close to doubling within eighteen months. The standing caveat applies: silver can remain cheap for longer than your patience or your account will tolerate.

Be Cautious When There Is Greed

Silver euphoria escalates faster than gold's, and the physical market is where the damage occurs. Once retail buyers arrive in numbers, premiums on coins and small bars can reach 30 to 50 % above spot. Buying physical silver at those premiums is the most dependable way to lose money in this metal: the spot price mean-reverts, whilst the premium simply disappears.

Silver's double existence as industrial input and investment asset produces specific blind spots:

• ◆ Industrial demand cannot be separated out — Over half of silver consumption goes into solar cells, electronics and medical use. Working from price data alone, the index cannot distinguish an industrially driven move from an investment-driven one.
• ◆ Volatility that is high by default — Silver moves roughly 50 % more than gold as a matter of routine. A reading of 30 may be unremarkable in silver whilst constituting a real signal in gold, so comparing the two numbers directly is misleading.
• ◆ VAT on silver in Ireland — Investment gold is exempt from VAT under section 90(1) of the VAT Consolidation Act 2010, but silver, platinum and palladium carry the standard rate of 23 %. An Irish buyer of physical silver therefore pays a materially different sum from the spot price the index is calculated on -- an asymmetry no technical indicator captures.
• ◆ Seasonal distortion — The Indian wedding season and Chinese New Year generate recurring demand spikes capable of tilting the reading towards greed without any genuine change in sentiment.