The price of Silver is currently on a bull’s run, reaching its highest level in seven years this week. This is against the backdrop of a falling US dollar, with a record low-interest rates, as investors look for alternative instruments to hedge funds.
Meanwhile, the precious metal has rallied more than 18% this week, reaching a high of $23.24 an ounce. It’s up 28% this year. This bullish run has gone past and outpaced the gains in gold, which has shot past $1,800 per ounce and is now approaching an all-time high of $1,920 per ounce reached in 2011. It was last trading at $1,882.34, a 24% rise year-to-date.
A lot of investors are looking for alternatives investment and trying to diversify their investment portfolio, due to the fears about the global coronavirus recession. Hence, the current surge in the precious metal assets is predicated by the search for reliable stores of value. These investors are diversifying their portfolio massively, especially to instruments that are recession proof and have the ability to bounce back if push comes to shove.
The bearish run of Greenback is giving foreign investors quick access to buy the precious metals – gold and silver.
What Is The Reason Behind The Price Increase
The increased demand for renewable energy and electric automobiles is indeed a significant catalyst to the demand for the precious metal. This is because silver is a key component in the value chain which is also a factor in its recent rise in price. Industrial buyers account for at least half of the demand of the precious metal – silver.
Mining stocks that give exposure to silver, such as London-listed Fresnillo, have given investors bumper returns so far this year. Shares in the Mexican company have risen over 90% to trade at £12.32 ($15.67) a share. New York-listed Endeavor Silver, Great Panther, and Fortuna Silver Mines have also seen big gains this year.
“Picking [market] tops though in this environment, is a hazardous occupation, and only for the brave, very deep-pocketed, or foolhardy,” said Jeffrey Halley, a senior market analyst at Oanda.
Silver is always referred to as the precious metal of the poor. However, it seems the goose in the market is laying a silver egg, giving the precious metal a lightbulb moment. Analysts have it that the price is expected to rise even more, but then, investors are implored to trade with caution.
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