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Strategist: The higher gold goes, the more attractive silver becomes

 
 Strategist: The higher gold goes, the more attractive silver becomes (photo credit: SHUTTERSTOCK)
Strategist: The higher gold goes, the more attractive silver becomes
(photo credit: SHUTTERSTOCK)

Gold may be getting the attention, but silver might be the best play, according to a Saxo Head of Commodity Strategy Ole Hansen.

In a note released Friday Hansen said, “Silver’s dual role as both a precious and industrial metal means its price is influenced by gold, industrial metals and the dollar.”

Silver prices hit a recent high in May, reaching $32.50, but opened trading around the $31.35 mark on Friday.

 Year-to-date silver prices. (Source: TradingView) (credit: PR)
Year-to-date silver prices. (Source: TradingView) (credit: PR)

“Between May and August, the gold-to-silver ratio widened from 73 ounces of silver per ounce of gold to 90 ounces,” Hasen said.

Recent reports show China’s demand for gold may be weakening, while its industrial demand for silver has skyrocketed due to its use in solar panels. The Chinese dominate the solar market.

“Investors cautious about paying record-high prices for gold may see better value in silver, which remains well below its 2011 record of $50.

Year to date, gold prices have risen more than 25% and silver has spiked close to 30%.

The May rally ending

After silver reached its high of the year in May, it sold off relatively quickly before a reinvigorated rally began in August.

“In May, silver experienced a deep correction alongside industrial metals due to concerns about Chinese demand,” Hansen wrote.

However, recent news has shown an increase in Asian demand for silver.

Silver demand has exceeded silver supply for three consecutive years and is on pace to continue that trend in 2024.

“From electrical switches and solar panels to chemical-producing catalysts, silver is an essential component in many industries. Its unique properties make it nearly impossible to substitute, and its users span a wide range of applications,” the Silver Institute reported.

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This article is for informational purposes only. The opinions and analysis herein are those of the author and are not financial advice. The Jerusalem Post (JPost.com) does not endorse or recommend any investments based on this information. Investors should consider their financial situation, investment goals, and risk tolerance before making any decisions. Consulting a qualified financial advisor is recommended. JPost.com is not liable for any investment losses from using this information. The information provided is for educational purposes only and should not be considered as trading or investment advice.

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