What a fascinating time it's been. If you've been watching precious metals, it seems like the lid on the pressure cooker is slowly being released.
After Gold's recent price surge, Silver has been on an upward path for the last few weeks, with prices reaching above £16.20 an ounce - levels not seen since 2013. The metal has gained 15.37% over the past month, outshining gold’s 4.17%.
Silver tends to lag gold and with the gold:silver ratio still at 82:1. It's reasonable to envisage a lot of upside potential. Back in 2011, the price moved to more than double where it is now to around £30 an ounce.
Silver prices have increased in August 2019 due to:
- Trade wars between the US and China
- Heightened military tensions in the Middle East
- Subdued demand for gold in India
- Federal Reserve's dovish outlook on interest rates
- Brexit worries of a 'No Deal' scenario
- North Korea tensions
- General slowed economic outlook
What's next for Silver?
Silver’s unrivaled characteristics make it indispensable for many industrial products. It's easy to see how growing industrial activity will sustain silver demand. Industrial applications account for roughly 60% of the global silver consumption. Notably, silver imports rose 35% year over year to around 225 million ounces in 2018 in the country.
However, some analysts are cautious as they don't share this same bullish outlook. According to them, the gains are not supported by fresh fundamentals for the metal.
Silver mining production fell 2% in 2018 and is anticipated to decline by 2% in 2019. This could be down to anything from an absence of development of new projects, declining ore grades, and depleting reserves. Consequently, it could be seen that a potential silver deficit is imminent, which in turn would set the stage for higher silver prices in the long-term.