News Article

Silver Has Best Year Since 2013, Outshines Gold

By Alejandro Ehrenberg | Fri, 08/07/2020 - 13:25

The Silver Institute highlighted silver’s remarkable price performance this year. “From an intra-day low of US$11.64/oz on March 18, the silver price has since rallied over 140 percent and is at a level not seen since 2013,” it noted. Today's price: US$28.25/oz.

The Silver Institute listed four factors to explain the metal’s soaring price: fears of inflation, remarkably low interest rates, continued liquidity boosts by central banks and silver’s safe haven status. The jump in price reflects renewed interest by both retail and institutional investors in silver as an investment vehicle, the international organization pointed out.

Among silver’s performance highlights this year, the Silver Institute emphasized silver price rallying 34 percent in July, outpacing every major global financial asset. July represented one of the best months for silver on record and its highest monthly gain since 1979. To this point, Investing Cube commented that recovering manufacturing activity and increased demand from China is pushing the metal’s price up. “Analysts with Bank of America Securities are bullish on silver and the bank has raised its 2021 price outlook for silver to US$30.49/oz, an increase from its earlier forecast of US$21.95/oz,” Investing Cube added.

Moreover, global silver-backed ETFs have posted all-time highs in 2020. These financial products currently stand at 1.25 billion oz, having increased by 296 million oz since Jan. 1, 2020, detailed the Silver Institute. As an explanation for this, ETF Trends proposed that investors who cannot afford gold are tuning to silver instead. “The pace of buying has been incredible across silver products, whereas you would expect that strength in gold. But once investors feel they are priced out of gold they may turn to silver or they may look at the gold/silver ratio and feel it is undervalued,” said Suki Cooper, an analyst at Standard Chartered in New York, to ETF Trends.

Another key development for silver in 2020 has been robust demand for silver bullion coin. Demand has risen so steeply that the US Mint is weighing whether to add coin production at the San Francisco and Philadelphia Mints to augment West Point Mint output, reported Coin World. “That prospect was broached by bureau officials during a July conference call to address purchasing projections with the 12 purchasers worldwide who are authorized to buy US Mint-struck bullion coins,” the online numismatic news outlet noted.

Finally, the Silver Institute called attention to the gold-silver ratio, the quantity of silver ounces needed to buy an ounce of gold: “The ratio peaked at 127:1 on March 18 and now stands at 72:1, a decrease of 43 percent.” In this connection, The Financial Times reported that silver could continue to outperform gold, as the ratio in March was more than double than in 2011, when gold prices last rose above US$1,900/oz. Additionally, Sugandha Sachdeva from Religare Broking told that silver’s comeback is expected to hold for the remaining of the year: “Even at the current ratio, the outlook for silver remains more positive than for gold.”

Alejandro Ehrenberg Alejandro Ehrenberg Journalist and Industry Analyst