Why I'm still holding silver
Silver: Why Im still holding silver - at Moneyweek.co.uk - the best of the week's international financial media.
Anyone who took any notice of MoneyWeek's advice to buy silver a few years ago when it was loitering at around $4 dollars an ounce would have been pretty pleased with themselves in April, when the price touched a 16-year high of $8.49. Sadly, since then it has fallen back to around $5.60 - I imagine they are now kicking themselves for not banking their profits then. However, they should take heart: not only have they made a good 40% out of the trade, but even now there is a good chance that they will get another bite at the cherry.
The fundamentals of the silver market remain excellent. I have just received this year's World Silver Survey (done every year for the Silver Institute by precious metals research firm GFMS) and it makes for happy reading. Last year was the 15th year in a row that demand outstripped new supply. That means inventories are still being depleted, a trend that is going to continue for very simple reasons. Low prices have discouraged new exploration and production. So supply remains very tight indeed (it takes anywhere from five to 15 years to get a new silver mine up and running, so mine production in 2003 was more or less the same as in 2002). One other thing to point out on the supply side is that much of the current shortfall in the silver market is made up by Chinese government sales (China has a lot of silver left over from the days when it operated a silver standard). Total government sales came in at around 80 million ounces last year, and the report suggests nearly 70% of that comes from China. That can't last. Philip Klapwijk, the executive chairman of GFMS, guesses that China has only two to three years' worth of that kind of supply left. Given this, a static supply of silver over the coming years looks rather like a best-case scenario. If Klapwijk is right, supply will start to fall.
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
-
The UK areas which saw biggest jump in asking prices in 2025 – is yours on the list?We look at the UK areas where asking prices rose the most last year.
-
‘Sandwich generation’ carers losing £6,000 a year to support elderly relativesMiddle-aged adults are often caught between caring for children or grandchildren and their elderly parents, leaving them taking time out of the workforce and facing a huge hit to wages while they are still trying to save for retirement. We look at the true cost of caring.
