Silver slips over 3 percent despite violence in Mexico’s mining regions and a historic supply deficit. The rally was overheated, traders are taking profits. Risks are nevertheless building dangerously.
Silver prices fell by more than three percent on Thursday, briefly reaching around $86.70 per ounce. This move continues the metal’s consolidation after a 24 percent increase in just six trading days. Despite the pullback, the market remains characterized by exceptionally high tension, as several events are now converging: acute supply risks, geopolitical pressure, and a structural deficit that is becoming increasingly acute.
At the center of the situation are developments in Mexico, the world’s largest silver producer. The situation escalated after Nemesio “El Mencho” Oseguera Cervantes, a cartel leader, was killed by security forces. The Jalisco Modern Generation Cartel (CJNG) responded with arson attacks, blockades, and assaults in around 20 states. At least 62 people have died. Of particular concern is the fact that the affected regions of Jalisco, Zacatecas, and Durango are among the most productive silver areas in the world, together supplying nearly ten percent of global production. Following the kidnapping of miners in January, the situation was already fragile; now, there is growing concern about actual production stoppages.
