We’ve talked a lot about gold in recent months, but what is currently happening in the world of our other favourite precious metal, silver?
How is Silver Looking?
At the time of writing this morning, the price of silver is sitting at £11.30 per ounce. This month has seen the price decrease by 1.71%, with the monthly high being £11.52.
Since the 1970s the average gold to silver ratio has been 55. However, this month - the ratio reached 87 - its highest point in 26 years. The gold to silver ratio is the amount of silver ounces in value it would take to buy one ounce of gold, so this figure means we can now buy 87 ounces of silver to one ounce of gold.
Supply & Demand
In April, the Silver Institute released its World Silver Survey 2019. This revealed that silver saw a 2.7% decline in supply during 2018 – this is partly due to a lack of silver mining over the last few years as lowering prices mean a lack of available financing for mining companies.
However, the demand for silver during 2018 reached a three-year high, rising by 3.5% compared to 2017. It is thought that this growth in demand looks to have been down to retail investment, most notably in silver bars, as well as growing applications such as electronics, photography and other industrial uses.
As one of silver’s most prominent buyers, India’s silver bullion imports alone increased by 36% last year, partly driven by jewellery and coins for weddings and festivals, as well as investment demand due to the lower price.
So, what does this mean for the future price of silver?
Looking to the Future
In most cases of a high gold-silver ratio, such as we are experiencing currently, history tells us that this usually leads to the price of silver increasing. However, we have seen reports that some experts are predicting possible price rises for silver in 2019, and some predicting the opposite – so our guess is as good as yours!
With the troubles in the US economy recently, as well as the ever-looming Brexit here in the UK, investors are watching for the ratio tipping point, and keeping a close watch on the spot price, holding their breath. But the question is, will the price go up, or sink with the pressure?
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.