Silver is set to follow gold

With gold rallying 10% so far this year, some investors are starting to pay attention to silver.

One ounce silver coins © Chris Ratcliffe/Bloomberg via Getty Images

With gold rallying 10% so far this year in dollar terms, some investors are starting to pay attention to "the yellow metal's sidekick", says Debbie Carlson for US News & World Report. Sometimes dubbed "poor man's gold" silver trades on about $16.50/oz, compared with $1,500/oz for gold silver prices are up 4.5% so far this year.

Demand from retail investors is a key catalyst for silver, adds Myra Saefong in Barron's. The World Silver Survey shows that "global investment in silver bars and coins grew 20% last year", yet supply is tight: 2018 also brought "a third consecutive annual decline in global production of the metal".

Yet unlike gold, which is used almost entirely as a store of wealth and in jewellery, the silver price is driven by both investment and industrial demand. And silver's rally this year has been depressed by concerns about the latter, says Capital Economics. But recent weeks have brought a wave of "safe-haven buying" that is likely to support the price for the rest of the year.

In fact, with so many investors looking for safety, it is surprising that silver prices have "lagged so far behind" this year's gold rally, says Jon Sindreu in The Wall Street Journal. As of early July, the ratio of gold to silver stood at a 24-year high. History shows that on a one-year time horizon the two precious metals are closely correlated. That leaves plenty of scope for silver to follow gold higher.

Recommended

Gold could set new records, even from here – here’s how to invest
Gold

Gold could set new records, even from here – here’s how to invest

The gold price has soared in recent days, and it could go higher yet, says John Stepek. Either way, you should hold some gold in your portfolio.
27 Jul 2020
Commodities look cheap
Commodities

Commodities look cheap

Gold may be on a bull run, but industrial commodities, including copper, zinc and aluminium, remain cheap.
17 Jan 2020
Don’t panic about Iran – but don’t sell your gold either
Gold

Don’t panic about Iran – but don’t sell your gold either

Markets have reacted calmly to the tension between the US and Iran. But don’t get too complacent. It’s still a good idea to hold on to some gold as in…
9 Jan 2020
Here’s how gold could rise above $7,000 an ounce
Commodities

Here’s how gold could rise above $7,000 an ounce

That the gold price could hit $7,000 an ounce is a logical and plausible possibility, says Charlie Morris. Here, he explains how it could get there.
30 Dec 2019

Most Popular

How will we repay our vast debt pile? Do we even need to?
Sponsored

How will we repay our vast debt pile? Do we even need to?

In his recent articles looking at different aspects of the fixed-income investing world, David Stevenson looked at inflation. Today he looks at a clos…
19 Oct 2020
The Bank of England should create a "Bitpound" digital currency and take the world by storm
Bitcoin

The Bank of England should create a "Bitpound" digital currency and take the world by storm

The Bank of England could win the race to create a respectable digital currency if it moves quickly, says Matthew Lynn.
18 Oct 2020
Negative interest rates and the end of free bank accounts
Bank accounts

Negative interest rates and the end of free bank accounts

Negative interest rates are likely to mean the introduction of fees for current accounts and other banking products. But that might make the UK bankin…
19 Oct 2020