Silver Has “Some Upside Left,” Says Analyst

June 15, 2010 – Gold and silver have both peaked lately, although silver is showing more volatility in the market. Since silver reached its highest point in two years in May, at $19.54 an ounce, it has fallen off six percent. The all-time high for silver is $20.81, which hit in May 2008. This morning, June 15, silver is at $18.43, up six cents.

Although gold and silver both have industrial uses, gold is primarily seen as an investment metal. Silver, on the other hand, is much more tied to industry and thus shares the characteristics of both an investment vehicle and a commodity. As industrial demand goes down, silver’s industrial value drops, while gold’s investment value rises in the down economy. Analyst and blogger “binve” of The Motley Fool wrote on June 12 that “gold demand is 85% investment … and 15% commodity. Silver is more like 70% commodity/30% investment.”

Mumbai analyst Bargav Vaidya notes that “silver is expected to trade in the range of $20-$17. It has some upside left.” Demand for silver has dropped by half in India over the last six months, but Vaidya thinks that silver is set to at least match, if not outperform, gold over the next few months as the economy slowly recovers and inflation rises around the globe.

A report this past week from India Infoline points out that “gold’s outperformance to silver is a signal about economic contraction or uncertainties.” The gold-silver ratio may continue to fluctuate for some time as gold and silver work out their complicated relationship, but, generally, as the economy grows stronger, so should the fortunes of the silver market.

Shannon King

Senior Staff Writer –

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