Silver lining to Trumpflation

published 17 February 2017

Silver has risen in price by more than 12% this year, and there should be further to go. Industrial applications make up around 55% of overall silver demand; they range from medicine (the metal has anti-bacterial properties) to solar panels. Thanks to the solar industry in particular, overall industrial demand growth expanded by 3% last year and is set for a similar expansion in 2017, reckons Bloomberg.com.

Meanwhile, jewellery accounts for a fifth of demand, while the rest stems from physical silver and silver-backed exchange-traded funds. Silver is a monetary metal and a traditional store of value like gold, so it tends to benefit from the same trends as the yellow metal. One that bodes well is the return of inflation.

In the US, wage growth has already hit a post-crisis high as the labour market continues to tighten, while core inflation reached a four-year high in 2016. Oil prices are rebounding, and Donald Trump's stimulus could give price rises an additional fillip. Some analysts are pencilling in inflation above 3% in the UK. On the other hand, if fears of protectionism gather strength, precious metals should benefit too.

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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.