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.
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