as precious metals surge, says the Financial Times, July 7, 2016.
In a glowing report, the Times noted that while “Gold has done predictably well in the wake of Brexit. . . The real star of the show has been silver.” In dollars, silver is up 16% since the Brexit vote but is up 45% for the year. Gold is up 28% on the year.
Reasons given for silver’s price surge include heavy bets by hedge funds and other speculators as holdings in silver-backed ETFs (Exchange Traded Funds) have risen 7% this year to 547 million ounces. Uncertainty for the British pound sterling and the euro also have driven people in the UK and Europe to buy the metals.
Additionally, the Times says, “Smaller investors in Asia have also influenced the price.” A weak economy and currency in China have investors there “chasing alternative hard assets like gold and silver.”
And, demand for silver in solar photovoltaic applications–which along with wind power is the cause célèbre of the green energy movement–rose 23% in 2015, for a second year of increases. The year 2016 is expected to see another increase.
On the supply side, JPMorgan forecasts a decline of 1.6% this year.
But, perhaps the real reason for silver’s price jump is summed up in the article’s last paragraph:
“‘People that have hated gold and silver in the past are now starting to allocate because of the lack of alternatives,’ says Ole Hanson, analyst at Saxo Bank. ‘This is real money coming into the sector. It’s not just gold and silver buffs.'”
In time, more “real money” will pour into the metals as all the flaws of fiat money, Keynesianism and central bank machinations are exposed. The second leg in this precious metals bull market is just getting started.