Why a surging gold price is driving renewed interest in its ‘poor cousin’ silver
- In short: The price of silver has risen 18 per cent in the last six months.
- Silver is increasingly being viewed as a monetary metal for the masses.
- What’s next: Future pricing and demand will depend on how silver is utilised in new technologies.
With the price of gold continuing to rise, attention is beginning to turn to another precious metal which may be more financially palatable for the masses — silver.
The silver price has risen 18 per cent in the last six months and is now worth just over $40 per ounce.
Australia has the largest share of the world’s economic silver resources, mostly in Queensland, the Northern Territory and South Australia, however mines right across the nation have silver as part of their overall commodity mix.
Association of Mining and Exploration Companies chief executive Warren Pearce said the timing may be perfect for mining companies to ride the wave of interest stemming from the surging gold price.
“If you look at the price, it started to spike probably for the best it’s been in three years. So certainly it’s getting a lot more attention than it has,” he said.
Multiple uses
While jewellery and cutlery are popular uses for silver, the metal now plays a role in everything from mirrors to electronics, solar panels and medicine.
Mr Pearce said given silver was a “useful” metal, its future value would depend on how it was used in technology.
“A whole host of traditional industries will start to have new lives, falling into different markets,” he said.
“But how much silver we’re going to need and what that actually means for the existing established industry is a bit bit unknown at this point.
“Depends which way the technology develops, and what exactly are going to be the the optimum parameters for the types of percentages of product that goes into battery storage, particularly renewable technologies.”
International interest
Silver’s potential is even getting traditional gold bulls excited.
At a webinar hosted by Arlington Group Asset Management last week, Canadian billionaire and investor Eric Sprott said the ability for the average investor to buy silver was enticing.
He said there were suggestions that Chinese media had been running TV advertisements in recent weeks, encouraging citizens to invest in silver rather than gold.
Macroeconomic analyst Luke Gromen agreed there was potential upside for silver.
“I’m bullish on silver, I think it will be a monetary metal for the masses,” he said.
But he said while silver was a “working metal”, gold’s comparative uselessness meant it would always be more valuable.
“I think gold will serve a role of deflating debt on central bank sheets, re-capping them, I think silver will benefit immensely,” he said.
New life for old projects
In Western Australia’s historic Goldfields mining region, Morrie Goodz said the time was right for silver.
The resource industry stalwart was once head of a company hoping to bring a “silver Superpit” to Kalgoorlie.
He said the current increasing price and interest in the precious metal was encouraging for current miners and may bring fresh interest to old proposals.
“Inevitably, I think the silver price had to return to a more realistic level. And so it is good to see that the price has recovered in recent times,” he said.
“We should be giving the green light to those projects we have assessed and they’ve just been on care maintenance.
“I think there is huge opportunity to be lifting our role in the production of these [polymetallic] metals.”
