Prospects of a global slowdown, perhaps even a worldwide recession, weighed on silver Tuesday, leading traders to bid down the price of the metal as well as shares of companies that produce it.
About half of silver's total world demand stems from industrial customers, so any sign of a slowdown in industrial activity hits silver assets particularly hard.
The U.S. Labor Department reported Friday that the world's largest economy created no new jobs and apparent paralysis in Europe over its now-chronic sovereign debt crises spread gloom over stock futures in Asia, Europe and the U.S., which were all down.
What began as a Greek problem has become a Portugese problem, and an Irish problem, and a Spanish problem and most recently an Italian problem. In each of those countries, the interest rate that traders are demanding to hold those governments' debt is shooting ever higher and exposing European banks -- which hold much of this sovereign debt -- to huge losses.
Market concerns have resurfaced regarding the euro debt struggles and global economic stability. This is driving fear among investors and bringing an atmosphere of reduced equity exposure, Andre Bakhos, director of market analytics at Lek Securities in New York, told Reuters.
These concerns have not left the market, they have only been diverted by a lack of headline prominence, and now they are coming back to start the negative cycle all over again.
In New York, December silver fell 86 cents to $42.21 an ounce. Silver for immediately delivery declined to $42.04.
In premarket trading, shares of Silver Wheaton Corp. and Silver Standard Resources Inc. both fell 2 percent, Hecla Mining Co. fell 2.3 percent, First Majestic Silver Corp. fell 2.4 percent and Silvercorp Metals Inc. fell 1 percent.
The price of iShares Silver Trust, the world's largest exchange-traded fund backed by physical silver, fell 2.8 percent.