In recent weeks, silver prices have been surging continuously. On July 23, the industrial metal rocketed to its highest level in seven years supported by a falling US dollar coupled with record-low interest rates. These factors pushed investors to rush for other haven assets.
The metal has rallied over 18% this week and reached a high of $23.24 an ounce. Based on the year-to-date data, silver has gained 28%. This jump is outpacing the gains recorded in the gold market that has surged above $1,800. Gold is gradually approaching its all-time high of around $1,920 which was set in 2011. The precious metal was last trading at $1,882.34, a 24% rise year-to-date.
This rush to acquire precious metals comes as investors look for reliable stores of value arising from fears about a coronavirus-induced global recession and the strength of the recovery.
A weak dollar is also making it quite cheap for the foreign investors to acquire gold and silver and the rock bottom interest rates make other haven investments like the US Treasuries appear less attractive.
Reasons For The Surge
Silver is a major component used in electric vehicles and there is a growing demand for renewable energy solutions. These might be the factors that are pushing the industrial metal higher. 50% of all the silver demand comes for industrial buyers.
Mostly referred to as the poor man’s precious metal, it might be silver’s time to shine. Analysts expect that the price will surge further although some are still cautious. A senior market analyst at Oanda, Jeffrey Halley, said:
“Picking [market] tops though in this environment, is a hazardous occupation, and only for the brave, very deep-pocketed, or foolhardy.”
Also, several other assets like the stocks seem to produce better returns in the long term according to a Deutsche Bank strategist Jim Reid. Thus, mining stocks that offer exposure to silver like London-listed Fresnillo (FNLPF), have given investors huge returns so far in 2020.
Shares from the Mexican firm have surged more than 90% to trade at £12.32 ($15.67) a share. Others like Endeavor Silver (EXK), Fortuna Silver Mines (FSM), and Great Panther (GPL) which are all listed on the NYSE have enjoyed huge gains this year as well.