had sharply outgrown gold gains in the past three months, and its classification as both an industrial and precious metal could lead it down a path of higher prices.
From Oct. 31 to Jan. 31, Comex silver futures rose nearly 25%, outpacing gold’s nearly 19% rally, “an unusual amount statistically that shows the precious metals market is heading higher on global economic growth in a year.” 2023,” Nicholas Colas wrote. – Founder of DataTrek Research, in a report dated January 25.
He noted that silver is primarily an industrial metal, while gold is primarily used as investment and jewelry – so the better performance of silver prices supports the notion that “the global economy is in better shape than feared in mid-2022.” Kulas primarily attributes this to the reopening of China and said it was “shaping up as a central investment theme” for the first months of this year.
Much of the noise around China’s economic reopening centered on oil and expectations of higher energy demand, which temporarily lifted crude oil to its highest price since November.
Many industrial minerals have also gained with the easing of Covid-related restrictions in China, the world’s largest metals consumer. Copper and iron ore Comex futures rose by about 11% in January.
Silver’s outperformance of gold in the past three months is “primarily due to real or projected future demand for silver due to industrial use factors such as slowly reopening China and other economies, supply constraints, and an expected increase in aggregate demand,” Michael says. Cogino, president and portfolio manager of the Perpetual Funds Group.
But this is not the whole story.
Increased demand for silver is expected to come not only from traditional industrial needs, such as construction and technology, but also from the global push toward clean energy production and related commodities such as electric cars, Cogino says.
Michael Gide, portfolio manager at ATAC Fund Family and publisher of the Lead-Lag Report, notes that there is also a “broader risk sentiment occurring globally with emerging markets outperforming, discretionary stocks leading in the US, and domestic commodities such as lumber playing the rally.” In outlook for growth and housing recovery.”
Given all that, the rise in industrial metals prices so far this year is only partly attributable to China’s recovery, he says.
Silver’s value as a precious metal is also likely to support prices. Comex silver futures settled at $23,609 an ounce on February 1.
Keith Weiner, founder and CEO of Monetary Metals, considers silver mostly a monetary metal rather than an industrial one.
He believes that the price of silver is better correlated with gold than with copper – and gold and silver “tell the story of monetary decline”. Silver’s path is higher, Weiner says, because the US dollar will continue to lose value. Prices of monetary metals – gold and silver – are “inverted to the dollar”.
Over the past three months, both Earned gold and silver While the ICE US Dollar Index, a benchmark for the international value of the dollar, lost more than 8%.
If China continues to reopen, and there is no global recession or major recession in the United States or Europe, Cugino says supply and demand factors could be a “tailwind to commodity prices.” He says monetary policy may also become a tailwind. Federal Reserve on Wednesday Raise the interest rate by a quarter of a pointmarking a slowdown after rising half a point in December.
With the right mix of factors, silver could go much higher, “easily to $30,” Cugino says, but also “back into the teens if a major global or US recession hits.”