Investors holding “poor man’s gold’’ are suddenly a lot richer, and silver’s rally may still have room to run.
Silver has surged 12% this month and touched a two-year high on Wednesday. The metal is benefiting as concerns over the global economic outlook bolster demand for haven assets, sending sister-metal gold to the highest since 2013.
“It’s all a validation of the existing gold trade, which we still think goes higher, but I think it’s to a point now where a lot of people probably feel they’ve missed the gold trade, and therefore you get this kind of poor man’s gold,” Citigroup Inc. technical strategist Tom Fitzpatrick said by phone.
Meanwhile, an ounce of gold still buys about 84 ounces of silver, well above the three-decade average of 67 ounces, also pointing to the possibility of more increases in the white metal, according Mike McGlone of Bloomberg Intelligence.
“The elevated gold-silver ratio and its potential for reversion favors advancing silver,” McGlone said in a note this month.
Source: Bloomberg Finance L.P.
Graphs: Used with permission of Bloomberg Finance L.P.
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