Two weeks ago, we reported how the price of silver could be on the way up, with gold’s demand spreading across the precious metals index. This week the silver spot price has risen by almost 8%, climbing from a £13.96 per ounce to the current price of £15.10 per ounce, and peaking slightly higher at £15.29.
In Dollar terms, silver is at $18.39 – the highest it has been since April 2017. This week’s gains show a substantial rise in demand, especially when compared to the month price increase of 11.33% and the three month gains of 31.98%. The average gains have been a little over 10% added value in a month, so for silver to almost match that in a week shows that safe haven demand for metals other than gold is beginning to make its mark.
The silver price in GBP per ounce for the past three months.
Rob Halliday-Stein, Managing Director of Jewellery Quarter Bullion, recently spoke to the Daily Telegraph about the fresh resurgence in silver’s popularity, pointing to a 300% increase in silver sales for August 2019 compared to August 2018, and highlighting how VAT-free silver in particular was making up the bulk of the demand.
One of the reasons for the demand increase is likely to be the gold-silver ratio, which currently puts an ounce of gold as the equivalent of 83 ounces of silver. This high ratio acts as an indicator (one of many) to investors that silver could be considered undervalued as an asset, and with gold setting all-time price records in Australia, India, the United Arab Emirates, and even in the Eurozone, many are hoping to get onboard with silver before that precious metal also starts to break records.
Gold vs Silver – Which gained more?
- Week: 9.1% gold vs 7.86% silver
- Month: 8.3% gold vs 11.43% silver
- 3 Months: 48% gold vs 31.61% silver
Last October we reported about Société Générale, who said they would be primarily buying silver as their safe haven of choice until the gold-silver ratio came back down to around the historical average of 60. The gold-silver ratio was at an almost identical point then, but gold’s surge in H1 of this year might have tempted the French investment specialists to back both metals.
With gold forecast by the likes of Goldman Sachs and UBS to rise to $1,600 in the coming months, silver could continue to accelerate its demand as a cheaper bullion alternative. This is definitely possible, with silver being the more notorious of the two metals for a sudden surge in value – as seen in 2011 when prices more than doubled to hit just shy of £30 per ounce.
