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.
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.