Henry Sanderson reports in Financial Times on the historically wide gap in the valuations of the two most common precious metals for investment. He writes:
Investors are betting on a rally in silver, after the gap between gold and the industrial metal soared to its widest level in more than three centuries.
In March the price of an ounce of gold was 125 times higher than the same amount of silver — a record going back to at least 1687, according to data compiled by Ross Norman, a veteran gold trader.
But since then the gap has closed to about 113 times, and analysts say more gains for silver are possible, as economies start to recover from the shock of coronavirus-related lockdowns and demand returns for use of the metal in electronics and solar panels.
“The longer gold keeps having a good performance you will get speculators . . . who will go ‘oh silver is really cheap’,” said Grant Beasley, a fund manager at Highbury Capital in Toronto.
“It’s not the most complicated argument but it’s true. As the speculative fever increases retail investors will go crazy. And then when they’re feverish you’re close to the top.”
Read more here.