In my continuing quest to bring you further evidence of the green shoots of economic recovery, I offer the latest iron-ore production figures from Rio Tinto. The mining giant reported last week that its iron-ore production in the second quarter had hit a record and was up 35 per cent compared with the first quarter. These figures suggest that industrial activity has stepped up significantly, particularly in China – and that can only be good news for the global economy.
Further evidence of increased industrial activity comes from analysis of the silver price, which is up 40 per cent since the start of the year.
Gold and silver prices usually track each other quite closely but in the past year the pricing ratio has diverged. Silver prices were weak while gold rocketed ahead because of increased investment demand. But in the past couple of months the ratio has narrowed again.
Silver is not much of an investment metal and jewellery sales have still not recovered so it is safe to assume that the reason silver prices have recovered is that industrial demand has picked up. More than 50 per cent of silver production is used in industries such as electronics compared with only 20 per cent of gold production.
As a result, silver benefits more than gold from any increase in industrial activity. So, for once, it is silver and not gold that is acting as a barometer of our economic fortunes.
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