By Myra P. Saefong
Gold has generally outpaced performance in silver over the last few years, but the tide may soon turn in favor of silver.
Forecasts pointing to a fourth straight yearly deficit in global supplies and a rise in demand to its second-highest level on record raise the potential for silver prices to rally, and even roughly double before the end of 2024.
“Naturally, there will be growing interest in silver the higher the gold price goes,” said Peter Spina, founder and president of investor websites GoldSeek.com and SilverSeek.com.
Gold futures /zigman2/quotes/210034565/delayed GC00 +0.05% /zigman2/quotes/210036755/delayed GCM24 +0.05% settled at $2,238.40 an ounce on Comex Thursday , the highest finish on record. Silver futures, meanwhile, rose to a 2024 high of $25.975 on March 21— nowhere near its record intraday high of $50.36 from Jan. 18, 1980, according to Dow Jones Market Data.
“Gold prices are already breaking out to record highs,” said Spina. Silver, meanwhile, “traditionally lags and has been doing so for some time.”
But the “window is closing,” he said. “The opportunity to buy ‘poor man’s gold’ is ending and from a technical perspective, we are likely to see a huge price acceleration” in silver /zigman2/quotes/210315219/delayed SI00 +0.41% /zigman2/quotes/236587764/delayed SIK24 +0.41% in the coming quarters.
Gold’s sister metal
Indeed, silver is known as “poor man’s gold” – a cheaper alternative among precious metals that also happens to serve an important purpose as a conductor in industrial applications.
Silver’s seen “less as a storage-of-value asset” than gold,” said Katy Kaminski, chief research strategist at alternative investment manager AlphaSimplex.
Given the “high level uncertainty with high valuation in equity markets, the threat of inflation and the need for value storage and diversification, gold is more positively positioned than silver as a safe-haven asset,” she said. Silver is also more widely used in industrial production, and with production and manufacturing having somewhat decreased, especially in China, it’s “not surprising that silver is lagging gold.”
Read: Record gold price flashes warning for Fed’s rate-cut hopes
Jena Santoro, senior manager of intelligence solutions at Everstream Analytics, said gold has been outperforming silver since 2016. This is a long-term trend likely driven by end-use applications and their relative value,” she said.
That trend of gold outperforming silver, however, could always be reversed as silver has a broader range of industrial uses than gold, Santoro said.
Based on the performance of futures prices for both gold and silver, that’s currently not the case, but silver futures may outpace gold this year and potentially hit a 10-year high around $30 an ounce due to renewed demand for silver in industrial uses, Santoro said.
This year “may be the year that the reversal takes place in silver’s favor,” she said.
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