Silver’s spell of manic-depression

Silver has had a “manic-depressive” year, says Tatyana Shumsky in Barron’s. Having hit record levels of near $50 an ounce last June, it fell almost 30% in five days. This year it has traded in a range around the $30 mark.

Silver has a “nasty” reputation among investors, given its extreme volatility, says Sterling Smith of Country Hedging. The market is very small and thus prone to big jumps when sentiment turns. To complicate matters further, silver is both an industrial metal and a traditional form of money and store of value, like gold.

While the lacklustre global backdrop implies subdued demand for industrial metals, silver also tends to ape and magnify gold’s moves.

Gold’s prospects remain bright. With “Europe in a seemingly never-ending crisis, China in a slowdown and the US unable to grow consistently”, as Danny Esposito of Penny Stock Detectives puts it, yet more money printing seems likely, which bodes well for the monetary metals.

So those with an appetite for risk may want to tuck away some silver, as history suggests it should outrun gold during the yellow metal’s next upswing. Investors can track the silver price with the London-listed Physical Silver ETF (PHSP).

  • peter

    Great article
    bought 10 ounce coin of silver at $28.50 per ounce but it feels too heavy too be real feels like i bought steel or something. the dealer is meant to be kosher anyway but i feel gold is really the only true money metal, just buy 7 gram coins of silver and gold if it’s supposed to be money. Eg what can you exchange 10 ounces of precious metal for ?
    plus whatch out for that vat on silver in this country but gold is tax free for some reason.

  • Ron

    I have tucked away 3 kilo of silver bullion, wanted 6 kilo but am holiding at 3 for the moment because not shure where the price is going after the ben bernanke talk other week i feel like he is stalling for time and would not say anything that would make people buy metals any way because it would be bad for his pockets the uk seems ready to print some cash though i just hope i made the right choise and that silver i got brings home the bacon 🙂