Silver rallied Tuesday to finish at its highest level since 2014, up by more than 80% from the year’s low, benefiting as both a precious and industrial metal as it looks to catch up with gold’s impressive year-to-date performance.
“Silver was long due for a catch-up with gold,” said Peter Grosskopf, chief executive officer at Sprott Inc. “As a much smaller market, once investor interest enters in size, its supply side gets swamped.”
As some parts of the global economy start to improve after COVID-19 shutdowns, silver’s “industrial supply and demand side have balanced,” Grosskopf told MarketWatch. “That creates a window for the wave of investment demand to push the price much higher.”
In Tuesday trading, September silver contract SIU20, 5.91% rose $1.37, or 6.8%, to settle at $21.557 an ounce on Comex. Prices based on the most-active contracts marked their highest settlement since March 2014, according to Dow Jones Market Data. They trade 83% above the year-to-date low of $11.772 seen on March 18, which was the lowest since January 2009.
Silver prices had settled early last week, and again on Monday, at the highest since September 2016.
Gains for silver compare with a climb in gold futures to their highest price in nearly nine years. On Tuesday, August gold GCQ20, 0.81% rose $26.50, or 1.5%, to settle at $1,843.90 an ounce.
Year to date, most-active gold futures trade about 21% higher, while silver is up by roughly 20%.
Silver has seen the “best of both worlds,” with its precious metal side boosted by safe-haven demand, as economies in China and the U.S. improve, proving the metal a lift as an industrial metal, said Jim Wyckoff, senior analyst at Kitco.com.
Silver trades in the lower half of its historical trading range, and has “much more upside potential,”. Gold is not far from its all-time high, but silver still has long way to go before it nears its record high, making silver look “undervalued” to investors, he said.
The record settlement level for most-active gold futures stands at $1,891.90 from August 22, 2011. Silver futures’ all-time settlement high was at $48.599 in April 2011, according to FactSet data.
Ross Norman, chief executive officer of precious metals news and information provider Metals Daily, said now that silver has rallied, “this frees gold up to continue what has already been an impressive rally,” and both metals are “better aligned.”
“Silver has seen very strong inflows into both the [exchange-traded funds] and in the futures market on Comex, prompting a breakout on the charts,”. Given that, Metals Daily has adjusted its second-half 2020 forecast on the metal to $25, up from a previous forecast of $23.
“Global macro events are positive precious metals and even though silver is partly an industrial metal, it is a case of a rising tide lifting all boats,” said Norman.
As for how high silver prices may go from here, Grosskopf said silver has “more torque” to move up than gold, and “intermediate charts” point to $30 an ounce.
Wyckoff, meanwhile, would only say that the all-time high for silver “in the coming years is not out of reach, and maybe much sooner than anybody thinks.”
