Silver in supply deficit but price unmoved so far
New York (Oct 10) Silver has been dubbed the ‘devil’s metal’ and likened to ‘gold on steroids’ because of its vastly more volatile price pattern vis-à-vis gold, with which it is inextricably linked. Indeed the prices of all the so-called precious metals tend to be linked to gold’s price performance although their fundamentals suggest that this should not be the case and, like silver, industrial supply/demand factors should be the main price drivers..
Over the past two years with gold in decline, silver has thus fared even worse, it tending to underperform gold on the downside and outperform on the up. A much followed measure of this is the gold:silver ratio which over the past few years has varied from around 35 to 70 and, at the time of writing is sitting at just over 70 – the worst level (for the silver investor that is) for 4 years.
In truth silver should be ranked as an industrial metal. Industrial usage in all its forms (including jewellery) accounts for up to around 75% of global silver demand. Its principal usage nowadays is as an industrial metal employed largely in electronics, photography, solar panels and in the medical and environmental sectors as a biocide (together around 50%) and in jewellery and silverware a further 20%. While many of silver’s properties in the industrial sphere parallel those of gold its much lower price makes it far more attractive as an industrial metal.