Silver Left Behind as Gold Claims the Spotlight With Record Price Spike to $2,233 per Ounce

This week, the value of gold soared to an unprecedented peak, hitting $2,233 per troy ounce as of March 29. In contrast, silver has not exhibited the same level of brilliance, with its value standing at $24.97 per troy ounce, a significant 91% decline from its all-time high of $47.91 on March 31, 2011.

Gold and Silver Diverge: Precious Metals Market Sees Unprecedented Shift

Fans of the precious yellow metal have been heartened by its performance, as the price per ounce of .999 fine gold reached an all-time high of $2,233. The ascendance of gold is linked to a multitude of factors, including the weakening of the U.S. dollar against a backdrop of both developed and emerging market currencies.

This trend has bolstered gold’s appeal as an investment option. The softening dollar is believed to be influenced by tempered expectations for Federal Reserve interest rate hikes and concerns over ongoing political and geopolitical tensions, including the conflicts in Ukraine and Gaza.

Additionally, central banks have been active buyers of gold, as reported by the World Bank. The “Gold Investing Handbook for Asset Managers” outlines the trend of substantial gold acquisitions to date. The report underscores the persistent geopolitical conflicts and their role in propelling gold values upward.

The author identifies a “positive relationship between gold prices and geopolitical risk, even when financial market uncertainty is taken into consideration.” Besides central banks, over-the-counter (OTC) trading activity has significantly contributed to the recent increase in gold prices.

Meanwhile, silver, often referred to as the ‘poor man’s gold,’ has not matched gold’s performance. Gold has risen by 2.37% over five days, whereas silver has seen a modest increase of 1.25% in the same period.

Typically, silver surpasses gold once a rally picks up speed, yet investors have shown reluctance to embrace silver in the current upturn. A report from commoditytrademantra.com observes that silver is currently lagging but suggests it might be premature to expect this trend to persist.

“The silver price may be lagging behind the gold price in the futures market, but it would be foolish to assume that implies some sort of permanent divergence between the two metals,” the editorial’s author opines. “Traditionally, silver is late to the party, but once it finds its momentum, it can easily outperform gold.”

However, silver is more volatile and the silver market lacks a similar firm foundation of backing that gold benefits from. For instance, the gold market has been supported by unprecedented central bank gold demand, which is not the case for silver. The commoditytrademantra.com report claims that analysts further believe silver needs to break through the $30 per ounce level before it can really take off and potentially reach $50 per ounce.

That would be the range for silver to surpass all-time highs achieved in 2011. Moreover, speculative positioning in silver futures has increased in recent weeks, but is still well below the levels seen in early 2020 when prices rallied towards $30 per ounce. In the dynamic arena of precious metals, gold’s recent climb to an unparalleled summit not only reflects the market’s response to economic uncertainties but also signifies the evolving landscape of current investment preferences.

As central banks and investors alike pivot towards the yellow metal, buoyed by geopolitical tensions and the dollar’s fluctuation, the contrast with silver’s sluggish pace hints at broader narratives of risk, opportunity, and the search for stability in volatile times. Time alone will reveal whether silver can gather the momentum to match its golden counterpart’s performance.

What do you think about gold’s performance in recent times? What are your thoughts on silver’s lackluster performance so far? Share your thoughts and opinions about this subject in the comments section below. #Write2Earn