“The most attractive precious metal is silver,” Maxwell Gold, Director of Investment Strategy at ETF Securities, told ETF Trends in a call. “It has the best fundamentals.”
Gold argued that while gold bullion could suffer in a rising rate environment since the precious metal does not offer a yield and grows less attractive to other higher-yielding conservative debt assets, silver will enjoy industrial demand – abound 50% of silver demand comes out of industrial related industries like solar, electronics and automobiles. Due to its more cyclical nature, silver shows a 80% correlation to gold.
Silver may continue to enjoy greater demand as industrial production speeds up.
“A combination of higher inflation, a weakening US dollar (in first half of year) and improving manufacturing growth is likely to see silver prices trade higher to US$21/oz in 2017,” Nitesh Shah, Commodity Strategist at ETF Securities, said in a research note.