While silver hasn’t quite kept up with gold over the past three months, there’s no reason why investors won’t flock back according to one analyst.
Speaking with Kitco News, Hecht Commodity Report creator Andrew Hecht said now that gold has pushed through the psychologically important $1,400 an ounce level that attention may turn toward silver.
The gold-silver ratio continues to trade at multi-decade highs (currently 92) and Hecht said he expects the ratio to go higher.
“There is still room for [it] to underperform but I think it’s only a matter of time be for investor sentiment shifts,” he said.
“At some point people are going to wake up to the value proposition,” he said. “Investment demand in silver is driven by sentiment and that will come back with people least expect it.”
He said the key breakthrough mark would be $16.20 per ounce — but thanks to gold’s meteoric rise there’s little chance of it going below $15.
“Gold is telling us that there is inflation and [it’s] making a statement on the weak currencies around the world,” Hecht said. “Gold back above $1,400 is telling us that silver is not going back below $15, so I would be a buyer here.”
While some analysts have been bearish on the precious metal as they expect weak global growth to weigh on silver’s industrial uses, which accounts for roughly 50 percent of the metals demand.
However, Hecht said that when investment demand picks up, it could easily outweigh any bearish factors.
Of course, buying coins and futures isn’t the only way to gain exposure to the precious metal.
Locally, there are a swathe of miners who have exposure to silver, such as Silver Mines (ASX:SVL) — which is the sole owner of the Bowdens Silver Project in NSW, the largest undeveloped silver deposit in Australia.
This content is produced by Star Investing in commercial partnership with Silver Mines. This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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