Silver beats gold for first time since 2006
Silver at an auction at Christie's in London: precious metals, and silver in particular, are back in fashion with investors. Photo: Bloomberg
Silver’s biggest discount to gold in 13 years has investors betting on the best annual return for silver since the Hunt brothers’ bid to corner the market in 1979.
Money managers are buying precious metals as a refuge from the 47 percent drop in the Standard & Poor’s 500 Index in the past year and growing concerns that Treasuries will fall as the U.S. government pledges $9.7 trillion to revive the economy. While gold will rise 25 percent this year, silver may jump 58 percent to $18 an ounce, said Philip Klapwijk, chairman of London-based precious metals research company GFMS Ltd.
“Silver will have a nice catch-up rally,” said Peter Sorrentino, who helps manage $15.5 billion at Huntington Asset Advisors in Cincinnati. “There’s a flight to precious metals as a storehouse of wealth. Silver got left behind and it’s been closing in quickly but there’s still a performance gap.” Huntington has about 7 percent of its assets in silver and 3 percent in gold, which is trading $80 an ounce below its record.
Gains would benefit Fresnillo Plc, the world’s biggest silver producer, Hochschild Mining Plc of Lima and Vancouver- based Pan American Silver Corp. Export revenue would climb in Peru and Mexico, the largest silver-mining nations. Eastman Kodak Co. faces higher costs for photographic materials.
The last time silver did better than gold was in 2006. So far this year, commodities, as measured by the Standard & Poor’s GSCI Index of 24 contracts, fell 3.7 percent, adding to the 43 percent plunge in 2008, the worst loss since the gauge was introduced in 1971.
(Bloomberg News)
- Pham-Duy Nguyen, Claudia Carpenter and Glenys Sim
