Precious metals normally rise and fall simultaneously. However, there have only been a few instances in silver’s history where it has been able to beat gold. The white metal is in a power brawl of sorts with gold in the new economy and may be on the verge of a silver breakout.
The sudden jump in the silver price was apparently caused by the global economic crisis, which had investors running and caused private investor demand for coins and small silver bars to soar.
“The enormous range of economic, financial and political issues facing the world and individual investors seems more likely to lead to a rekindling of silver demand from investors,” New York-based CPM Group said in its Silver Yearbook 2018.
It has also been stated that the metals photovoltaic use by the solar trade played a large role in the metal’s enormous uptick — a use that still aids the metal in 2018.
Not unexpectedly, it did not take long at all for the metals price to plunge after the surge. In fact, the metal closed out the year 2011 at a price of just under $28 an ounce. From 2012 until now, silver has been on a solid decline, undergoing a dip under $14 in 2015 — a cost that current markets have been avoiding.
The gold/silver ratio regulates the relative value of the two precious metals and is often employed by investors as a limitation in deciding which metal to purchase during several points in time.
From 2000 until present time, the gold/silver ratio has climbed above 80, which hypothetically means that if a person owns 1 ounce of gold bullion, they may sell this single gold ounce for an investment return of about 80 ounces of silver bullion.
Angela Bouzanis, senior economist at FocusEconomics, spoke with INN about recent ratio standings, stating, “the gold/silver ratio climbed throughout 2017 and peaked in the first quarter of 2018, averaging just under 80 in the quarter.”
Bouzanis trusts that a fall in the ratio will be valuable for the white metal, giving it more of a chance to outperform gold.
In 2017 a few analysts stated, there was a disparity in silver demand and supply, with a deficit in reserves to the number of more than 100 million ounces. It is projected that more than 1,500 tons of silver are used from rejected electronics every 12 months.
Most purchases for the metal come from applications used in manufacturing, including solar panels, medical devices, electronics and other products.
The use of the precious metal in microelectronics has doubled since 2000 while the use of silver in solar panels jumped more than six times and will continue as more consumers move to clean solar electricity in the new economy.