Wang Danyang, full media reporter of Yangcheng Evening News
As the saying goes, true gold and silver. Since ancient times, gold and silver have played an important role in trading.
Over the past two months, gold has made record gains and repeatedly made headlines. However, in terms of which precious metal is "rising more happily" this year, with its strong financial attributes and industrial demand, the original "second in a thousand years" silver is better than "tall" gold.
Silver set a record of "gratifying rise"
The data shows that the price of silver has soared by more than 32% this year, far exceeding the increase of gold price by less than 20%, becoming one of the best performing major commodities this year.
At 10:16 a.m. on May 22, the main contract of silver futures of the Shanghai Futures Exchange rose 1.2%.
As early as May 21, the spot price of silver in London exceeded 32 dollars/ounce, a new 11 year high since 2013; COMEX silver rose 0.78% to $32.68 per ounce. On May 20, the main contract of silver futures of the Shanghai Futures Exchange hit the limit, and the closing price rose by 8%, hitting a new high for more than 10 years.
From the perspective of monthly and annual growth, the main contract of silver futures of the SSE has increased by more than 16% since May, and has increased by more than 35% since the beginning of the year.
If the time axis is pulled to four years ago, that is, 2020, the low point of silver price in recent years, then the main contract of silver futures of Shanghai Futures Exchange has increased nearly twice in more than four years.
However, silver is still relatively cheap.
Take the opening on May 22, when the highest spot silver price in London was US $32.11 per ounce, and the highest spot gold price in London was US $2423.26 per ounce. At present, it takes about 75 ounces of silver to buy 1 ounce of gold, which means that the gold silver ratio is 75:1.
"Gold silver ratio" helps "stand out"?
Why can silver stand out from gold, silver, copper, palladium and platinum?
The possible answer cannot be separated from the dual characteristics of silver: silver is not only a financial asset, but also an industrial input including clean energy technologies such as photovoltaic cells.
A report released by Minsheng Securities in May believed that silver, as one of the precious metals, has played a monetary role for a long time in history, which is similar to gold in terms of financial attributes. After gold rose, silver usually had the demand to supplement.
In January this year, the gold silver ratio soared to 1:90, the highest level since September 2022. In recent 20 years, the average gold silver ratio is 68:1.
A research report of Citigroup said at that time that if the Federal Reserve began to cut interest rates, economic growth would remain strong in the second half of the year, and the gold silver ratio might fall to 1:70. If economic growth slowed, the gold silver ratio might further rise.
It is worth noting that as early as last May, Citigroup released a report that silver is expected to rise to $30 per ounce in the next six months to a year.
Also holding the same view that "the ratio of gold to silver indicates that silver is still undervalued" is the famous American gold company Schiff Gold.
According to Schiff Gold's data analysis, the modern gold silver ratio averages between 40:1 and 50:1. However, in 2011, the ratio of gold to silver dropped to 30:1, and in 1979, it dropped to below 20:1.
Historically, this ratio has always returned to this average. Moreover, when the gold silver ratio returns to the mean, the fluctuation is often very intense. When the price difference is so large, silver not only outperforms gold, but also rises sharply in a short time, and the rebound is rapid and powerful.
Industrial "Shortage of Supply" Affects Price
On the other hand, as an industrial input, supply and demand dynamics have had an impact on silver price fluctuations.
The report of Minsheng Securities shows that since the industrial demand for silver accounts for about 50%, silver has both financial and industrial attributes, and its price fluctuates more.
On the demand side, silver is the main component of solar panels. With the strong growth of the industry, the World Silver Association expects that this year's silver consumption will hit a record high. As early as last year, silver demand in all categories, including industrial demand, set a record. Industrial procurement accounts for about half of global demand. With the continuous promotion of "green energy", this proportion is expected to only increase in the next few years.
However, on the supply side, the silver market has been in short supply for the fourth consecutive year.
The World Silver Association forecasts that the global silver demand will reach 1.2 billion ounces in 2024, the second highest level in history. Among them, the continued strong industrial end use and the recovery of jewelry and silver demand will drive demand growth. It is estimated that the global silver industrial manufacturing volume will increase by 4% in 2024, reaching a record 690 million ounces. At the same time, against this background, the silver market will be in short supply for the fourth consecutive year, and this year's supply shortage is expected to be the second most serious level on record.
As of 10:16 a.m. on May 22, Beijing time, COMEX silver rose 1% to $32.4 per ounce, and London spot silver rose 0.59% to $32.15 per ounce; COMEX gold rose 0.11% to US $2429 per ounce, and spot gold in London rose 0.19% to US $2425.45 per ounce.
Edited by: Wu Jiahong