The following is an edited excerpt from the “Global Silver Investment” report prepared by Metals Focus for The Silver Institute. Visit www.silverinstitute.org for complimentary access to the full report.
Investor sentiment has strengthened for silver (as well as the wider precious metals complex), in contrast with recent years’ activity, when many institutional investors had been skeptical towards the metal. This reflects silver’s underperformance to gold over a near-uninterrupted, eight-year period (the gold-to-silver ratio rose from 30.5 in April 2011 to a multi-decade high of 93.5 in July 2019). Investors also saw prices surpass US$50, and the rapid retreat when so many were caught out. That such dramatic events are possible reflects the modest size of global silver investment, where relatively small inflows or liquidations can disproportionately affect the market, leading to heightened price volatility, such as that seen less than a decade ago. Another challenge facing potential silver investors is the market’s depth of liquidity, including the availability of counterparts, to execute significant trades.
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