Silver lining to Trumpflation

Silver has risen in price by more than 12% this year, and there should be further to go. Industrial applications make up around 55% of overall silver demand; they range from medicine (the metal has anti-bacterial properties) to solar panels. Thanks to the solar industry in particular, overall industrial demand growth expanded by 3% last year and is set for a similar expansion in 2017, reckons Bloomberg.com.

Meanwhile, jewellery accounts for a fifth of demand, while the rest stems from physical silver and silver-backed exchange-traded funds. Silver is a monetary metal and a traditional store of value like gold, so it tends to benefit from the same trends as the yellow metal. One that bodes well is the return of inflation.

In the US, wage growth has already hit a post-crisis high as the labour market continues to tighten, while core inflation reached a four-year high in 2016. Oil prices are rebounding, and Donald Trump’s stimulus could give price rises an additional fillip. Some analysts are pencilling in inflation above 3% in the UK. On the other hand, if fears of protectionism gather strength, precious metals should benefit too.

Merryn

Claim 12 issues of MoneyWeek (plus much more) for just £12!

Let MoneyWeek show you how to profit, whatever the outcome of the upcoming general election.

Start your no-obligation trial today and get up to speed on:

  • The latest shifts in the economy…
  • The ongoing Brexit negotiations…
  • The new tax rules…
  • Trump’s protectionist policies…

Plus lots more.

We’ll show you what it all means for your money.

Plus, the moment you begin your trial, we’ll rush you over THREE free investment reports:

‘How to escape the most hated tax in Britain’: Inheritance tax hits many unsuspecting families. Our report tells how to pass on up to £2m of your money to your family without the taxman getting a look in.

‘How to profit from a Trump presidency’: The election of Donald Trump was a watershed moment for the US economy. This report details the sectors our analysts think will boom from Trump’s premiership, and gives specific investments you can buy to profit.

‘Best shares to watch in 2017’: Includes the transcript from our roundtable panel of investment professionals – and 12 tips they’re currently tipping. The report also analyses key assets, including property, oil and the countries whose stock markets currently offer the most value.