Silver plunged 7 percent on Thursday, heading for its biggest weekly loss since 1983 and dragging gold 2 percent lower, as panic selling accelerated across the commodities sector. Silver has now lost more than 20 percent, the conventional criteria for a bear market, since it surged to a record high near $50 an ounce last Thursday.
Silver's sharp decline for a fifth day appeared to trigger sharp losses in crude oil and other commodities. The Reuters/Jefferies CRB index was set for its biggest weekly fall since late 2008. Speculators in the silver futures market were forced to liquidate positions after the CME Group raised margins five times in under two weeks, an 84 percent rise in trading costs that has helped provoke a nearly unprecedented sell-off.
Spot silver fell as much as 8 percent to a six-week low of $35.82 an ounce, down about 25 percent so far this week. It was off the day's low at $36.26 by 12:25 pm EDT (1625 GMT). Investor liquidation prompted gold to slide around 2 percent to $1,478.70 an ounce, its lowest since April 18. Spot gold fell 1.6 percent to $1,491.91 an ounce. COMEX June gold futures were last down $23.60 at $1,491.70.
Silver's decline sent the gold/silver ratio, which measures how much silver an ounce of gold can buy, to an eight-week high above 40 from just below 32 last Thursday. Investors scrambled out of physical silver, as reflected by the 15.3 million-ounce fall on Thursday in metal holdings in global ETFs, with the world's largest - the iShares Silver Trust staging the second-biggest one-day fall since its inception in 2006. iShares holdings peaked at 11,390.6 tonnes early last week, when silver prices raced toward record highs.
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