Silver: a better bet than gold?

Silver has hovered around the $7 an ounce mark for the past six months. But the uptrend of the past two years looks far from over. Demand has exceeded mined supply for the past 16 years. Since the late 1990s, the gap has been plugged by stockpiles held by the Chinese central bank, which are now widely thought to be close to depletion. Boosting supplies rapidly won't be easy, as there are few primary silver mines in existence silver is largely a by-product of base-metal mining.

A slide in demand for silver, owing to the advent of digital photography, should be offset by the need for silver in other industrial applications as China and India improve their standard of living. Silver is used in fields from medicine to computer technology, and a rising price shouldn't choke off demand, as the metal rarely comprises a large proportion of the end product's cost.

MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

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

That's putting it mildly, says independent silver analyst Ted Butler. Consider that silver is actually rarer than gold there is less of it above ground, and because silver is used as an industrial commodity, it is barely recoverable, unlike gold.

So silver is likely to become even rarer as stockpiles deplete. Yet it seems that nobody knows this: gold is currently priced as if it were the rarer metal. "That should get your juices flowing".

MoneyWeek

Sign up to Money Morning

Recommended further reading: