After a long time in the doldrums, the price of silver is
stirring again. In a nutshell, here's what you need to know.
Silver futures in New York jumped above US$17.00 overnight to reach a 10
month high.
The price of silver is up more than 20% since the beginning of January.
The grey metal has achieved the best return this year of any in the
Bloomberg Commodity Index.
The gold/silver ratio has fallen from 83:1 to around 74:1, meaning it now
takes eight fewer ounces of silver to buy an ounce of gold. (The long term
average is around 50.)
Silver hit almost US$50 per ounce five years ago this week.
Despite the Australian dollar's recent strength, silver is also
trading higher in the local currency. [The Perth Mint silver price chart
21.4.16].
While the price of silver tends to follow gold, it is significantly more
volatile. Over time it has shown that it can jump with sudden, intense
movements.
Explanations put forward for silver's latest rebound include falling
silver production and rising bullish bets from investors thanks to the big
move in the gold/silver ratio.
Above all, say analysts, is the improved outlook for industrial demand
based on better expectations for China's economic growth.
Charts published by Bloomberg
suggest the price of silver is set fair for further gains. Time will tell if
silver is set to shine again or whether this rally destined to run out of
steam.
