Silver price likely to outperform Gold in the future. Here’s how

Silver price likely to outperform Gold in the future. Here’s how
Written by:
Michael Harris
6th August, 17:48
  • Gold prices closed on a new record high above $2,040 per ounce overnight
  • Industrial consumption will surge once the world economy starts recovering, boosting silver prices
  • After it gained 34% in July, silver prices are now pushing to log levels above $30

Silver price is on a good path to outperform gold, according to the Deutsche Bank analyst. Prices of both metals have surged in the past few months amid the struggling world economy as well as the declining U.S. dollar.

Fundamental analysis: Silver to outperform gold?

In 2020, bullion prices have rocketed to record highs, a trend that was last seen in September 2011. Investors have been massively turning to precious metals since the pandemic shows no signs of slowing down. 

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Gold prices closed on a new record high above $2,040 per ounce overnight, breaking above the $2,000 mark for the first time ever, partly due to the geopolitical turmoil. Analysts at Mizuho Bank warned that the recent massive explosion in Beirut, “probably (added) to the shine of Gold above $2020.”

Michael Hsueh, a commodities and foreign exchange strategist at Deutsche Bank, believes silver will even outperform gold.

Accordingly, industrial consumption will surge once the world economy starts recovering. This is likely to provide demand for silver, due to its incredible usability across industries.

“Silver … has a much higher industrial component to it. So, much higher component of silver supply demand in industrial consumption. And in an environment where we see the global economy recovering, that’s another reason to buy silver,” Hsueh said.

Citi Bank analysts issued a note last month, pointing out that silver prices are increasing compared to gold thanks to a rebound in manufacturing operations. Invezz wrote in April that gold prices could reach $2,000/ounce this year.

Technical analysis: Seven-year highs logged

Spot gold prices soared over 32% year-to-date and are nearing the best year since 1979. On the other hand, silver prices also showed excellent performance, jumping over 30% since the start of the year. 

Silver price monthly chart (TradingView)

After adding nearly 34% in July, silver spot prices are already up 5% in August. The price action cleared a major horizontal resistance line at $26.15, which then facilitated a strong interest to buy Silver. The buyers are now pressing with plans to reach levels above $30 this month.

Summary

Gold prices have hit the highest levels since September 2011 on faltering economy and coronavirus and are close to having the best year since 1979. Silver is doing just as good, with some analysts expecting silver to outperform gold in the coming years.

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