Silver has sprung back to life. After sliding for months, it gained 20% in August and has now exceeded $23 an ounce. A rise of a fifth is considered a bull market. Until recently, silver had been grappling with "the worst of two worlds", as Commerzbank's Eugen Weinberg puts it. It is both a monetary and an industrial metal. Industry comprises about 50% of demand, while it also functions as a precious metal, mirroring gold's moves. Concern over global growth had compounded the fading appeal of precious metals as the US looks set to start moving towards tighter monetary policy.
But the latest data from China has pointed to a slight improvement in growth, while Europe is now out of recession. So the global growth outlook has improved somewhat. "Silver was also just oversold," says Frank McGhee of Integrated Brokerage Services. Short-sellers rushed to buy it back once it bounced, providing a further boost.
Can the rally last? The world economy remains lacklustre and Chinese growth has shifted down a gear. However, new uses have been found for silver in recent years, while the expanding solar industry in Asia bodes well for a boost in demand for silver for use in photovoltaic cells, notes Jeff Clark on Goldseek.com.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Global demand in this segment could double in three years (it now accounts for 6% of fabrication demand) and China and Japan alone could then need 11% of global mine supply. And the danger of an inflation surge thanks to recent money printing along with the scope for further financial crises, remains. So this notoriously volatile metal may be worth a look for the long term. There is a London-listed ETF, the ETFS Physical Silver (LSE: PHSP).
-
Paying the grandkids’ school fees could generate a shock IHT billPrivate school fees have soared as a result of the government’s VAT policy, meaning more grandparents are helping out – but what are the tax implications?
-
Number of savings deals hits record high – as interest rates slump to two-year lowSavers have more choice than ever when it comes to choosing a savings account or cash ISA. But, the interest rates on offer continue to fall. What’s next for the savings market?
