Gold News

Silver Down, Gold Up?

How silver's industrial uses are dragging on its price right now...


A LOT OF
disappointed investors are wondering why silver hasn't done a better job catching up with the Gold Price, writes Brad Zigler at Hard Assets Investor.

You can see their predicament in a chart plotting silver's relative strength. Think of it as a Gold/Silver Ratio turned upside down.

There are myriad reasons for silver's lackluster performance compared with gold. Not least is the fact that silver's an industrial metal as well as a precious metal. Industrial use, in fact, outstrips jewelry fabrication demand by more than a threefold factor.

Silver is a component in batteries, bearings, solder and brazing materials as well as electronics. And in an economic downturn, demand for these materials naturally declines.

Add to that the diminishing role of silver in photography in the digital age and you have a very elastic price. Whereas gold, by comparison, has limited industrial utility. So its price mainly reflects jewelry and Gold Investment demand.

Silver's recovery to its former highs seems more likely in a booming economy when industry is cooking. Plainly, that's not now.

Silver will of course have its shining moments. It does, after all, run alongside gold with an 82% correlation. But gold just isn't dragging the ball and chain of an economic recovery around with it.

Some hopeful investors believe that, because silver fell harder than Gold Prices, there's a more explosive recovery due.

Perhaps. But the one element most likely to lift silver up to challenge its former highs is a broad-based economic resurgence. What are the odds of that...?

How best to Buy Gold, and store it securely, at low cost today? Start with a free gram of gold at BullionVault here...

Hardassetsinvestor.com is a research-oriented website devoted to sharing ideas about investing in the natural resources sector. Published by Van Eck Associates Corporation, the site offers an educational resource for both individual and institutional investors interested in learning more about commodity equities, commodity futures, and gold – the three major components of the hard assets marketplace.

See full archive of Hard Assests Investor.
 

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

Follow Us

Facebook Youtube Twitter LinkedIn

 

 

Market Fundamentals