Gold’s little brother is upstaging his sibling post-Brexit, to the surprise of some analysts. Since the political and economic fallout of Britain’s withdrawal from the European Union, investors have been flocking to traditional safe havens such as the US, gold, and even silver. Gold, in particular, tends to benefit from this trend, but thus far silver has rallied far more. It is usually the case that silver prices are far more volatile compared to its sibling. This time around silver has rallied 17 percent since the Brexit, whereas gold has only gained 7 percent.
Gold is typically a more popular form of investment both when things are good and when things are bad. Since 2011 until recently, both gold and silver fell as investors looked for investments in a somewhat recovering global economy. Silver plummeted 70 percent while gold only fell 40 percent. On the flip side, silver is now outpacing gold as a safe bet against a struggling global economy. One factor analysts are attributing to this trend is the relative price of silver compared to gold. Silver’s 70 percent drop over the past few years makes it a much cheaper option compared to gold.
Another cause for silver’s popularity is its use in industrial and manufacturing sectors. Although jewelry and other luxury items are sometimes used as a haven investment, silver has practical uses in electronic components and some industrial equipment, whereas gold has relatively fewer uses. Additionally, the supply of silver is expected to take a dip over the coming months after enjoying a decade of supply gains, leading to further gains in silver’s price. With the Brexit and the Italian banking crisis, both gold and silver are expected to make gains through the rest of the year.