It turns out that silver might be winning the gold when it comes to investment returns.
While gold and copper have captured headlines this year, their under-the-radar little sibling, silver, is trading around its highest level since 2012, and is up about 21% year to date.
Silver, like copper, has practical utility beyond its value as a financial asset. Silver is used as a raw material for applications like manufacturing the semiconductor chips used for AI, and in the renewable energy sector, where it’s used to make solar panels. In fact, the Silver Institute reported that industrial demand for silver reached a record in 2023.
“This trend is expected to continue with total silver demand forecasted to grow by 2% in 2024, while supply is forecasted to fall 1%, creating a potential multi-year low deficit,” according to a recent note written by Adam Turnquist, Chief Technical Strategist for LPL Financial.
Silver is popular among traders at the moment simply because it’s cheaper than gold. But there’s also a practical element to the element’s recent rise. Silver can conduct heat and electricity better than any other metal on the planet, which means its industrial applications are nearly limitless.
For instance, China is one of the largest sources of silver demand, and imports to China have surged due to silver’s role in making solar panels. China is ramping up solar panel production, which means the country is set to buy even more of the metal in the weeks ahead.
Silver has outperformed this year in spite of economic policy that could have hurt demand. High interest rates often attract investors to fixed income opportunities with higher yields instead of precious metals. In addition, a booming stock market also can pull people toward stocks instead of silver, gold, or copper.
Silver is worth a pretty penny
Mixing metals in fashion is in, but not all metals are created equal when it comes to investing. While silver has been climbing, copper and gold have not delivered the same returns.
Gold mining has hit a roadblock, according to the World Gold Council, with the shiny metal getting harder and harder to find. Meanwhile, copper has had a difficult time keeping up the momentum that pushed it to highs a few months ago thanks to a slowdown in Chinese demand.
So instead of going for the gold, maybe investors should try searching for silver.—LB
