Can silver keep shining?

Silver has jumped by over 15% in just three weeks to more than $32 an ounce. The silver market is small and thus prone to large moves up or down. Silver typically imitates and magnifies gold’s moves because it is also a traditional monetary metal and store of value – gold has gained 5% in three weeks. But silver is also a base metal, with industry accounting for 53% of demand. Weak industrial demand is currently being more than offset by investment demand.

Can this continue? Hopes of imminent money printing from the Federal Reserve have buoyed precious metals, although last week’s speech by chairman Ben Bernanke suggests investors are jumping the gun. Still, the long-term outlook remains positive. Possible further money printing and negative real interest rates mean fears of currency debasement won’t disappear in a hurry. There is ample scope for more eurozone jitters; central banks continue to buy gold; and supply is tightening. “The gold bull market is not over,” says Morgan Stanley.

Gold is a safer bet, but investors with the appetite for risk can play silver via the London-listed Physical Silver ETF (PHSP). Or there’s the world’s biggest silver producer Fresnillo (FRES), which yields 2.4%.