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".

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

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.

Advertisement

Recommended

Visit/investments/commodities/600639/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
Visit/520466/gold-dont-panic-and-dont-sell
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
Visit/520221/heres-how-gold-could-rise-above-7000-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
Visit/520199/gold-is-in-a-bull-market-and-it-could-have-much-further-to-go
Commodities

Gold is in a bull market – and it could have much further to go

Many investors forget that gold is still the best-performing asset of this century, says Charlie Morris. It could also have much further to go.
27 Dec 2019

Most Popular

Visit/investments/property/house-prices/600840/the-biggest-risk-facing-the-uk-housing-market-right-now
House prices

The biggest risk facing the UK housing market right now

For house prices to stagnate or even fall would be healthy for the property market, says John Stepek. But there is a distinct danger that isn't going …
17 Feb 2020
Visit/currencies/600842/eur-usd-euro-slide-against-us-dollar
Currencies

The euro’s slide against the US dollar looks set to continue

The euro has been in a bear market against the US dollar for two years now. And on a broader scale since 2008. A decline like that is telling us somet…
19 Feb 2020
Visit/economy/uk-economy/600862/britains-economy-might-spring-a-surprise-on-the-doomsayers-this-year
UK Economy

Britain’s economy might spring a surprise on the doomsayers this year

The UK economy is looking pretty good – we’re more at risk of a boom than a bust, says John Stepek. Here’s why, and what it means for your portfolio.
20 Feb 2020
Visit/517625/tr-european-growth-trust-why-investors-shouldnt-overlook-europe
Sponsored

Why investors shouldn’t overlook Europe

SPONSORED CONTENT - Ollie Beckett, manager of the TR European Growth Trust, tackles investor questions around Europe’s economic outlook and the conseq…
6 Nov 2019