Silver Sell-Off Creates Buying Opportunity
ByTim TreadgoldContributor
Tim Treadgold is an Australian journalist specializing in mining
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Nov 25, 2024 at 08:31pm EST
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A sharp fall in the price of silver has created a buying opportunity for investors following a metal which has better fundamental appeal than its richer sister, gold.
The fall of 12.1% over the past four weeks by silver is double a 6.3% drop in the price of gold.
Both precious metals have been sold off after reports of a ceasefire in Lebanon and the choice of investment professional Scott Bessent as U.S. Treasury Secretary.
Scott Bessent speaks in July at the National [+]
MIDDLE EAST IMAGES/AFP VIA GETTY IMAGES
Gold and Silver are classic countercyclical investments, rising in times of economic and political instability and falling in stable conditions.
But the latest moves have seen silver treated more harshly than gold with its fall from $34.45 an ounce at the end of October to $30.29/oz easily outstripping gold’s decline from $2786/oz to $2611/oz.
A bounce back by silver to around $33/oz seems likely with that price tipped by Morgan Stanley, an investment bank, as the target for the second quarter of next year.
Strong industrial demand, especially from the electronics sector, is the factor likely to see silver outperform gold next year.
Silver’s PV Boom
Whereas only 10% of gold is consumed by industry, an estimated 55% of silver goes into products such as solar panels and photovoltaics (PVs) where demand grew by 33% last year and 64% this year.
Adding to the appeal of silver is a big market deficit which started to open five years ago and has got steadily wider with the shortfall in fresh mine supply being met by a drawdown in above ground stocks.
Solar panels are a fast-growing market for silver. [+]
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Morgan Stanley, in a research note published late last week, said silver’s dual precious metal and industrial characteristics meant there was no single factor in understanding the silver price.
The report, titled “The Silver Puzzle”, said silver’s strong rise from $24/oz over the past 12 months was aided by sizeable market deficits which are expected to continue well beyond next year.