As stores of value, silver and gold are often tied together, with silver frequently following gold’s footsteps performance-wise. Silver slipped below $18 for the first time since June 2020, but some experts see it as having a unique path to recovery. “Don’t pay attention to gold, pay attention to copper,” said Ole Hansen, head of commodity strategy at Saxo Bank, in a phone interview with MarketWatch.
Gold is down 6% on the year, which has it ahead of the market at large. Silver, meanwhile, has fallen 23%, more closely matching copper’s 21% decline.
Silver’s importance as an industrial metal is continuing to grow, given its role in several critical green technologies. Hansen thinks copper – another industrial metal – might shed some light on where silver goes next. He noted, “the gold-silver ratio, last at 96 (ounces of silver per ounce of gold), has retraced more than 50% of the 2020 to 2021 collapse from 127 to 62 with the next level of resistance around 102.5, a potential further 6% underperformance relative to gold, while a break back below 94 would be the first signal of strength starting to come back.”
The Inflation Reduction Act – which will invest in EVs, solar power, and several other green technologies – could boost silver, making today’s lows an excellent buying opportunity. The Sprott Physical Silver Trust (PSLV) offers exposure to physical silver. The additional government investment in projects to improve national infrastructure will likely bode well for copper and, in turn, silver. Of course, silver’s traditional role as a store of value might also prove beneficial to the metal, given the uncertain markets. With the global recession, inflation, rising rates, and geopolitical tensions mounting, silver has multiple avenues for a turnaround ahead.
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