Silver will regain its shine

published 16 January 2015

Like gold, silver has slipped to a near-four-year low in recent months. "Neither of silver's split personalities" will do it much good for now, says Mary de Wet in Barron's.

Silver is used in a wide range of industries, and the tepid global recovery doesn't seem strong enough to give demand a significant fillip. Demand ebbed by 6%in 2014. Supplies, meanwhile, are healthy.

Then there's silver's role as a monetary metal: it is a classic inflation hedge that often imitates and amplifies gold's movements.The gradual economic recovery, and the prospect of higher interest rates, is bad news for a traditional safe haven that pays no interest.

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But on a longer-term view this could be a promising entry point. New medical uses are being discovered for the metal, which should boost demand. A surge in inflation, while unlikely at present, can't be ruled out, given all the recent money printing.

Healthy emerging-market demand for gold should drum up more interest in silver too. Investors should keep gold in their portfolios as insurance and those who can stomach the volatility can play silver as a leveraged bet on the yellow metal. The exchange-traded commodity ETFS Physical Silver (LSE: PHAG) tracks the spot price.

Andrew is the editor of MoneyWeek magazine. He grew up in Vienna and studied at the University of St Andrews, where he gained a first-class MA in geography & international relations.

After graduating he began to contribute to the foreign page of The Week and soon afterwards joined MoneyWeek at its inception in October 2000. He helped Merryn Somerset Webb establish it as Britain’s best-selling financial magazine, contributing to every section of the publication and specialising in macroeconomics and stockmarkets, before going part-time.

His freelance projects have included a 2009 relaunch of The Pharma Letter, where he covered corporate news and political developments in the German pharmaceuticals market for two years, and a multiyear stint as deputy editor of the Barclays account at Redwood, a marketing agency.

Andrew has been editing MoneyWeek since 2018, and continues to specialise in investment and news in German-speaking countries owing to his fluent command of the language.