Beyond gold: Silver and platinum are now the metals to watch
NEW YORK (June 6) Gold continues to receive considerable attention as it remains a critical monetary asset in global financial markets. However, this week, all the excitement was in silver and platinum.
Although silver has not been able to hold gains above $36 an ounce, it is still on track to end the week with a 9% gain. Silver is trading at its highest level in 13 years, and while investors should expect some volatility, analysts say the break above $35 an ounce is significant.
They note this is only the third time in history that silver has reached this price level. According to commodity analysts at TD Securities, the last time silver hit this level was in 2010—and it took only six weeks for prices to peak at $50 an ounce.
Interest in silver has been growing steadily for a month, ever since gold hit a record high above $3,500 an ounce, pushing the gold/silver ratio to an 11-year high above 100. However, analysts have pointed out that silver has been undervalued compared to gold for several years.
Looking back, it makes sense that gold has outperformed silver during times of economic uncertainty and geopolitical chaos, which have driven safe-haven demand.
Record central bank demand over the last three years has provided solid support for gold as a monetary metal. Silver, on the other hand, has been left behind for one simple reason: central banks don’t buy silver.
However, investors are finally beginning to see value in silver, as industrial demand continues to drive significant supply deficits. Due to its industrial consumption, silver is actually a better inflation hedge than gold. The growing solar power sector is currently the biggest driver of silver demand. According to the Silver Institute, nearly 196 tonnes of silver will be used in photovoltaic solar panels this year.
The second-largest segment of the silver market is jewelry, which is expected to consume 196 tonnes of the metal.
Of course, if you’re not interested in silver, there’s always platinum. The industrial metal is set to end the week with a nearly 12% gain, with prices firmly above $1,150 an ounce.
Platinum prices are now trading at a three-year high and are experiencing their biggest rally since July 2020.
Like silver, platinum is viewed as a value play, driven by strong fundamentals and growing industrial demand, which continues to create supply deficits. Platinum is a critical metal in the automotive sector, which accounts for about 80% of global demand. It is used in autocatalytic converters, which help reduce harmful emissions from internal combustion engines.
Gold will always be the heavyweight in the monetary arena. But silver and platinum? They're stepping into the ring with something to prove. If you’re only looking at gold, you might be missing the real action.
KitcoNews
