Silver and gold fell last week as new inflation data has boosted rate hike expectations, although they have since recovered, with silver up about 2% in October so far.
Silver dropped 9.6% in September after climbing 16% in August. In total, it is down 16% so far this year after touching a record above $115 in January, on the tail end of a rally that drove it up 141% in 2025.
While the Fed had indicated another rate hike was unlikely before December, now analysts' expectations have changed. With recent CPI and PPI data showing higher than expected inflation, 53.7% now believe another rate hike is imminent.
Why are rate hikes so bearish for silver?
Rapid rate increases and market volatility can trigger sell-offs in broader equities or margin pressures. Investors and leveraged traders often liquidate liquid safe-haven assets like silver to cover cash needs or margin calls.
Silver does not pay interest, dividends, or yield. When central banks raise interest rates, yield-bearing assets like U.S. Treasuries, government bonds, and cash equivalents become more attractive, prompting investors to rotate capital out of precious metals.
This is a mistake.
Silver acts as a hedge against inflation because it has intrinsic, tangible value that cannot be printed or devalued by central banks like fiat currency.
So in the midst of an inflationary cycle, silver is one of the best ways to preserve your purchasing power.
And, at a lower per-ounce cost than gold, silver offers an accessible way for everyday investors or smaller-scale savers to build a tangible asset reserve in their portfolio.
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