Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
It’s not just gold that glistens. Slightly poorer sibling silver is enjoying a similarly stellar run as wars and geopolitical vicissitudes drive investors into safe havens. Both precious metals are up around a fifth so far this year.
The duo are seldom in lockstep. Both have been used for coins and jewellery since time immemorial, but silver is a more quotidian metal; almost 20 times as abundant as gold and with industrial applications ranging from electronics to solar panels.
That tethers the lustrous metal to economic growth, a correlation that is growing as more silver goes into gadgets, aeronautics and the like. Industry swallows up roughly 60 per cent of silver production, up 10 percentage points in the past decade.
For some, the greater volatility and lesser liquidity of so-called poor man’s gold make it akin to a leveraged bet on that more covetable metal. Others opt to trade the ratio between the two; a measure of how many ounces of silver you can buy with an ounce of gold.
This metric’s history is long — it ranged around 10-15 times in ancient Greece — and is volatile. Times of panic, such as the financial crisis in 2008, tend to favour gold over silver. During the pandemic the ratio rose to a spread-busting 127, according to LSEG data; last month, tariff mayhem elevated the multiplier to 100.
A chunky premium might look reasonable to those preferring to seek sanctuary rather than bet on economic growth. But some resilience attaches to silver. It is used in green technologies, defence and electronics, a trio of sectors forging ahead. And the fan base is growing. The Russian central bank struck a pioneering note at the end of last year when it unveiled plans to add silver to its vaults.
Supply dynamics are supportive, meanwhile. Demand, while down on 2024, will exceed supply for the fifth year on the trot in 2025, forecasts the Silver Institute, a US-based industry body.
Traders seeking to avoid tariffs by stocking up on gold ingots are also turning to silver. Investors meantime are no longer giving the cold shoulder to exchange traded funds. Net inflows of $1.6bn in the first 27 days of June, according to Morningstar, exceed those of the entire 2024, which followed two years of outflows. Shares in Fresnillo, a UK-listed Mexican silver miner, are up 120 per cent so far this year.
Silverines will always play second fiddle to the throngs of gold bugs. A sparkling performance may suggest it has had its moment in the sun. But as a simultaneous safe haven and play on growth sectors, few things hew quite so neatly to the times.