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Soaring Silver Attracts Investors

Wednesday 20th May 2020

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Silver prices are surging, making the metal one of the market’s best-performing assets in the second quarter, with investors seeking havens that can hold their value during times of economic uncertainty. 

Front-month silver futures advanced 2.5% to $17.892 a troy ounce Tuesday, extending a recent rally. They have risen 14% in the past four sessions and have rebounded 52% from a low hit in March. For the second quarter, they are up 27%, a sharp recovery from a selloff earlier in the year.  

In March, a stock-market crash pushed investors to sell a range of assets to raise cash, including precious metals normally considered safer like gold and silver. 

Precious metals are now bouncing back, with many analysts seeking to protect against another market downturn because of the economic damage caused by the coronavirus. Heavy safe-haven buying has lifted gold prices back near a 7½-year high. 

Still, gold’s recent gains pale in comparison to silver’s. Silver has lagged behind gold for years and tends to be more volatile, in part because roughly half of global demand comes from industrial uses. That can make silver more sensitive to the world economy. 

While silver’s industrial uses have held prices back in the past, they have provided a short-term boost recently with investors piling into wagers on a longterm economic recovery as businesses reopen. Those hopes have lifted growthsensitive materials from oil to copper, lately. 

At the same time, demand for havens remains steady, and ultralow interest rates are making precious metals more attractive to yield-seeking investors looking for assets other than bonds. With many analysts expecting market volatility to 

persist, demand for physical silver bars and coins has gone up, while exchangetraded funds like the iShares Silver Trust have posted big inflows. 

“We think safe-haven demand for silver will continue to be a key driver of prices going forward,” Capital Economics analysts said in a recent note. 

Still, some analysts remain wary that silver prices could reverse again, particularly if good news about the economy pushes investors to sell havens and buy riskier options like stocks. 

Drivers of silver prices are notoriously hard to predict, however, because positive news about growth can also mean a pickup in industrial demand. 

Elsewhere in commodities Tuesday, most-actively traded U.S. crude-oil futures for July delivery rose 1% to $31.96 a barrel, extending a recent rebound with drivers returning to the road and consuming more fuel. Brent crude futures for July delivery, the global gauge of oil prices, inched down 0.5% to $34.65 a barrel but have also surged lately. 

Record supply cuts have also helped oil recover from an April collapse while demand perks up. 

Source: Wall Street Journal 

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