The price of silver rose by around 7% at the tail end of last week, and some experts believe that the price could be about to rocket even higher in comparison to gold.
The silver price saw a sudden surge amid the situation with the Reddit retail trader army who joined forces to pump money into stocks such as GameStop, which then led to prominent hedge funds incurring extreme losses. However, retail-focused brokerages have since hit back by restricting trade on these and as a result GameStop are now seeing losses.
With trading restricted in these stocks, Reddit traders appear to be focusing elsewhere, and called to drive silver prices higher by buying shares in silver miners. Trading in these miners like First Majestic Silver then surged, some by up to around 30%, which impacted spot prices.
On Thursday morning, an ounce of silver was priced at £18.35. By Friday afternoon, the price had shot up to over £20, a change of over 8%.
The Gold-Silver Ratio
The gold-silver ratio is also worth looking at. Simply, this is the amount of silver it takes to purchase one ounce of gold.
The ratio has sat around the low 70s this month, and on Friday afternoon sat at around 68, a low figure unseen since August, and before that - in 2017. That’s 68 ounces of silver for every ounce of gold.
Where will silver go from here?
Silver may have rallied strong at the close of the last working week due to the unprecedented influence of Reddit, but can it continue? The move may have been unprecedented, but it could well be a sign of things to come. This recent situation may well encourage more tactical buying from those investors who believe that silver is undervalued in comparison to gold.
Movement in the silver price can also often increase the general demand to buy. Historically, with silver being a liquid and portable commodity it remains a strong and reliable resource. And with more room to run due to growing demand as a both a safe-haven investment and also for use in industry, we could well see silver soar.
This blog represents one person’s opinion only. Customers should conduct their own research and take advice before making an investment. We do not offer investment advice.