Far East Capital Newsletter
Silver stocks should be on the watchlist
8 Jun 2020

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Silver stocks should be on the watchlist

Our markets are experiencing the greatest romance with gold since the 1980s, which saw the revival of gold production in Australia. Everyone wants gold, but what about its cheaper relative, silver? There hasn’t been much chatter about silver even though it too has currency value, particularly in the USA. Should we be getting excited by the outlook for silver prices?

The silver price has lifted by almost 30% over the last month, and by 50% since early March, when the virus caused a quick collapse. It is back to levels of US$16-18/oz where it spent most of the second half of 2019, but it is still a long way short of its highs early this decade, as demonstrated on the chart below. The second chart shows how the silver price has performed relative to the gold price over the last 20 years. It suggests that silver has some catching up to do in order to retain the historical correlation. If you want to be ahead of the pack, maybe it is time to get set in silver. 

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