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

The charts that matter: China upsets cryptocurrency markets
Global Economy

The charts that matter: China upsets cryptocurrency markets

Bitcoin slid again this week after China declared all cryptocurrency transactions illegal. Here’s what’s happened to the charts that matter most to th…
25 Sep 2021
Iron-ore price fall hits mining stocks
Commodities

Iron-ore price fall hits mining stocks

The iron-ore price hit a record high of over $235 a tonne in May. But it has since fallen to below $100, sparking a sell-off in mining stocks.
24 Sep 2021
The uranium price is soaring – here’s the best way to play it now
Energy

The uranium price is soaring – here’s the best way to play it now

Uranium, the key ingredient to nuclear power, has been ignored since the bubble of 2006, but now the uranium price is rising again. Dominic Frisby exp…
22 Sep 2021
Why is the UK short of CO2 and what does it mean for you?
UK Economy

Why is the UK short of CO2 and what does it mean for you?

The UK is experiencing a carbon dioxide shortage that could lead to empty shelves in supermarkets. Saloni Sardana explains what’s going on and how it …
21 Sep 2021

Most Popular

A nightmare 1970s scenario for investors is edging closer
Investment strategy

A nightmare 1970s scenario for investors is edging closer

Inflation need not be a worry unless it is driven by labour market shortages. Unfortunately, writes macroeconomist Philip Pilkington, that’s exactly w…
17 Sep 2021
Two shipping funds to buy for steady income
Investment trusts

Two shipping funds to buy for steady income

Returns from owning ships are volatile, but these two investment trusts are trying to make the sector less risky.
7 Sep 2021
Should investors be worried about stagflation?
US Economy

Should investors be worried about stagflation?

The latest US employment data has raised the ugly spectre of “stagflation” – weak growth and high inflation. John Stepek looks at what’s going on and …
6 Sep 2021