The Wall Street Journal: Silver Prices Rally as Investors Seek Cheaper Precious Metals

Article by Ira Iosebashvili in The Wall Street Journal

Investors are taking a shine to silver, as a soaring rally in gold puts the spotlight on the less expensive precious metal.

Silver for September delivery was recently up 0.9% at $16.61 a troy ounce on the Comex division of the New York Mercantile Exchange. Prices have risen around 8% in July, and are on track for their best monthly performance since December. They stand at their highest level in more than a year.

For silver bulls, the gains have been a long time coming. Investors had largely ignored the metal in 2019, even as expectations of a Federal Reserve rate cut took gold to a six-year high.

There are several factors now fueling silver’s rally. Both gold and silver tend to become more attractive to investors when central bank easing is on the horizon, as the metals struggle to compete with yield-bearing assets when rates rise.

Unlike gold, however, silver is used extensively in manufacturing, and its price has been depressed by fears of slowing global growth.

While those fears haven’t entirely dissipated, gold’s 11% year-to-date rise has sent some investors looking for cheaper alternatives, analysts said. Silver prices were still down for the year at the start of July, while gold prices had already notched a double-digit gain.

“There was a disconnect between gold and silver prices for a while,” said Edward Meir, a consultant at broker-dealer INTL FCStone. Lately, however, “there’s been a relative value rotation into silver.”

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