Silver hot streaks gather the pace. Best market since 2011
By Polina Devitt and Sherin Elizabeth Varghese
(Reuters) – Silver prices surged to their highest in almost 14 years on Wednesday, with concerns over US tariff policies, signs of tension in spot markets and growing interest in gold alternatives.
Spot Silver is the highest level since September 2011, up 0.3% at $39.40 per troy ounce at 1354 GMT.
Silver, both precious and industrial metals, has grown 36% this year, surpassing the 31% growth in gold and entering the key $40 oz mark whiskers. Metals hit a record high of $49 in 2011.
US President Donald Trump’s plan to import 50% import duties into copper starting August 1, and US Mexican import duties expanded the premium on US futures on silver and other metals on London’s benchmark in July, resulting in an increase in lease fees in spot markets.
Gold, silver, platinum and palladium were excluded from Trump’s April mutual tariffs, but “the broader market is not replacing it like that, taking pages from Comex Copper’s Handbook,” Nicky Shiels, head of metals strategy at MKS PAMP.
According to Shiels, the price of the Spot Silver could reach $42 per ounce this year.
Analysts also said industrial demand for silver remains strong towards its fifth year of structural market deficit, with investment demand gaining momentum as a more affordable alternative to gold.
Silver’s recent rally improved its gold ratio to its strongest level in seven months. Currently, in April you will need 87 ounces of silver to buy 87 ounces of silver, compared to 105 ounces.
“It’s copper tariffs that sent the spinoff on the strange tangent that captured other metals,” said the London-based precious metal trader, adding that lease fees in the spot market should fall if borrowing activity caused by the fear of US tariffs sinks.
According to Nitesh Shah, commodity strategist at WisdomTree, current momentum could be hot enough to consume more than $40 in the short term.
“But with positioning growing, I wouldn’t be surprised if next year we’ll return to $35 before returning to $45/Oz,” added Shah.
(Reporting by Sherin Elizabeth Barghese of Bengaluru, Asisa Shivaprazad, and Polina David of London, Edited by Ed Osmond)