Investors and silver traders bought the white metal frantically, with price growth outpacing that of gold and the gold-to-silver ratio narrowing as a result.
A big driver behind the recent momentum is the resurgence of generalist investor interest in the industry, said Gary Wagner, editor of TheGoldForecast.com.
“The reason I think this could have happened is one, we talk about scarcity, but two, millennials, people who have invested money in the US stock markets who are in their thirties and forties, are realize that they need a safe haven asset in case there is a bubble, ”Wagner said.
Money has become a safe haven asset, Wagner noted.
“Silver is a unique metal in that it is one of the most difficult metals to mold,” he says. “Silver itself has the ability to be a precious metal and at the same time is widely used in industry,” he said.
Wagner added that industrial demand is recovering, although at a slower pace than rising metal prices.
“The resumption of the pandemic at this time and the economic fallout that will follow will lag behind these movements in precious metals,” he said. “What is most impressive for me is when you consider that in March, just a few months ago, [silver] went below $ 12 an ounce… it has practically doubled in a few months, and that’s huge.
Spot silver last traded at $ 22.59 an ounce, down 1.76% on Thursday’s trading session.
On gold, Wagner maintains a constructive stance, noting that it is only a matter of time before the price hits all-time highs in US dollar terms.
Much of this rally in gold and silver has been driven by institutional investors.
“If you look at the trader engagement report, even though it is a week late, what I have noticed over the last three reports is a massive build up of long positions by fund managers and hedge funds, so it’s not the people who come in and speculate, ”he said. “Institutional buying of gold and silver represents a large percentage of the activity that we observe.”
Central banks also bought gold, but to a lesser extent than the year before, he added.
Wagner said institutional investors could prepare for tougher economic times ahead.
“We haven’t even started to feel the economic fallout that will follow the pandemic when it ends and when people count the massive spending, the money that has been spent by governments, it has to come back somehow. of another. GDP [gross domestic product] himself contracted. Right now we have a budget deficit which is just out of control, so these things are inflationary, ”he said.
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