Silver: the bull is back

The industrial and monetary metal has moved back into bull-market territory. But can it last?

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.

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).

Recommended

How to invest in silver, the precious metal set to shine again
Silver and other precious metals

How to invest in silver, the precious metal set to shine again

The price of silver – both a precious and industrial metal – has plunged in recent months. Yet it still has huge potential, says David J Stevenson. He…
15 Sep 2022
Silver – the cheap precious metal set for a multi-week rally
Silver and other precious metals

Silver – the cheap precious metal set for a multi-week rally

Silver is full of potential – but it is a risky investment. Right now, however, it’s cheap and the outlook is positive. Dominic Frisby explains why.
14 Sep 2022
A lesson for investors from a ill-fated silver mine
Investment strategy

A lesson for investors from a ill-fated silver mine

Mining methods may have changed since the industry’s early days, but the business hasn’t – digging ore from the ground and selling it at a profit. The…
29 Aug 2022
Silver and platinum: two precious metals that will be screaming buys when the dollar turns
Silver and other precious metals

Silver and platinum: two precious metals that will be screaming buys when the dollar turns

The soaring US dollar has depressed the price of virtually every metal – and none more so than platinum and silver. They may have further to fall yet…
13 Jul 2022

Most Popular

What to do as the age of cheap money and overpriced equities ends
Investment strategy

What to do as the age of cheap money and overpriced equities ends

The age of cheap money, overpriced equities and negative interest rates is over. The great bond bull market is over. All this means you will be losin…
29 Sep 2022
Why everyone is over-reacting to the mini-Budget
Budget

Why everyone is over-reacting to the mini-Budget

Most analyses of the chancellor’s mini-Budget speech have failed to grasp its purpose and significance, says Max King
29 Sep 2022
Mini-Budget: will Kwasi Kwarteng’s gamble on growth work?
Budget

Mini-Budget: will Kwasi Kwarteng’s gamble on growth work?

The government has launched the biggest dash for growth in 50 years, relaunching an approach known as supply-side economics. What is the plan – and wi…
30 Sep 2022