If you like gold, you got to love silver.
Spot silver prices surged to $47.73 per ounce in trade this morning as the white metal maintains its promise of being the new gold, having surged 99.17 per cent in the past six months. In comparison, gold prices have increased 13.5 per cent in the period although they remain at their lifetime highs.
Spot gold is trading at $1508.20/oz, about $3 lower thyan the $1511.23/oz high the yellow metal made on Friday. Silver prices on the other hand have surged to a new 31-year high, and the metal is up 155 per cent in one year, compared with gold’s more modest ascent of 31.6 per cent in a year.
While many analysts are now seeing gold prices move closer to bubble territory – although not actually in bubble territory as of now – a number of experts are now seen favouring silver over gold as a long-term store of capital and inflation hedge.
For one, silver isn’t just a precious metal – it is also one of the main industrial metals. One of the most conductive substances known to man, it’s used in everything from photography, to compact discs, to semi-conductors, to medical equipment. Basically, all high-tech devices contain some element of silver in them.
In fact, silver’s use as jewellery, silverware, coins and investments makes up just 38 per cent of the metal’s usage while 44 per cent is accounted for by industrial use and another 18 per cent for photography. If the recent trend of photography going digital has had any effect on its usage, it has obviously been more than compensated for by an increase elsewhere as demand for silver remains robust, as upheld by its rising prices.
It’s a well-known investment tenet – gold and silver both hold their value while paper money loses its value with inflation.
In the last 10 years, gold has gone up 473 per cent. But during the same 10 years, silver has gone up 942 per cent. So silver did about 50 per cent better than gold. In the last two years, gold has gone up 71 per cent, but silver has gone up 282 per cent in those two years. In 2010, gold went up 27 per cent in dollar (dirham) terms, but silver went up 83 per cent.
Of course, if an investor believes that prices of gold or silver have shot up too fast, you may want to cash out at this stage, but for all practical purposes, the bull-run in precious metals – silver and gold, in that order – continues, with no signs of abating.