Silver 'Will Outperform Gold'


Silver, given the long-term correlation between the two metals, is due a catch-up.

Demand from investors concerned that loose monetary policy will produce inflation would push the price of both metals higher, Moonraker Fund Management said, but silver, which had fallen behind gold in recent years, was likely to catch up in view of the long-term correlation between the two prices.

"Gold outperformed silver by 46pc over the three years to May 31 2010 and silver, given the long-term correlation between the two metals, is due a catch-up," the company said. "As gold becomes ever more expensive, investors will turn to silver as an alternative precious metal."

Rises in the price of gold and silver did not represent bubbles while confidence in Western currencies continued to deteriorate, the company said. "The euro is currently under pressure because of the debt crisis and sterling is next in line, before attention will finally turns to the US dollar.

"Western currencies will continue to be derated versus the currencies of non-indebted countries such as China and Brazil."

Mr. Charlesworth said silver, which is trading at around $18-$19 an ounce, had an additional attribute over gold in that it is continually consumed for industrial purposes.

He said: "Silver has lots of practical applications and is widely used for example in plasma screens, mobile phones and coins. I am more bullish on silver than gold in that when it moves it shifts very quickly and it is due a catch-up with gold."

He said gold, now trading at around $1,225 per ounce, was set to go much higher, "quite possibly in excess of $5,000", although the price was impossible to predict for certain.

Related Articles

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe