Despite the silver price retreating 23% over the last 12 months many commentators expect the silver price to rebound and outperform gold.
Many point to the gold-silver ratio, which expresses the total amount of silver ounces required to buy one ounce of gold. When the ratio is high many believe silver is undervalued when compared to gold. Throughout 2014 the ratio has continued to widen and currently stands at 72:1. The ratio has averaged 43:1 over the last century according to historic data. For this reason many silver bulls suggest when the market finally turns silver will significantly outperform gold.
Silver is an industrial metal and is a vital component in many industries. More and more uses are being found for silver and many expect this trend to continue. In 2013 silver demand outpaced supply.
Institutional investors like George Soros and John Hussman have made large bets on the silver price increasing by purchasing large stakes in Silver Wheaton and Pan American Silver.