Silver, which is very popular among retail investors, can enjoy explosive surges when the conditions are right. The catalysts typically include a recovery in manufacturing demand and loose monetary policy, which increases its relative appeal as a store of value. “We are seeing these two factors driving money up over the next 6 to 12 months,” Citi analysts said this week. The bank expects the price to hit $ 25 an ounce by the middle of next year.
Industrial applications, including electronics and photovoltaic cells used in solar panels, account for about 55% of the demand for silver, according to RBC Capital Markets.
This contrasts with gold, where investment accounts for a much larger share of demand, making its price more sensitive to fluctuations in sentiment. Investors have chosen silver as the way to play this “green” recovery, said Colin Hamilton, analyst at BMO Capital Markets.