The price of gold broke above $2,600/oz. for the first time ever last week after the Federal Reserve cut interest rates for the first time in over four years. This was the latest in a series of record high prices for gold that has taken place over the course of the last 12 months, but gold is not the only precious metal having an extraordinary year.
The price of silver has also been on the rise, and like gold, silver is believed to have much more room to grow.
Silver prices are experiencing an explosive rally in 2024.
The price of silver broke above $30/oz. for the first time in over a decade this year, fueled in part by many of the same factors that have driven gold’s astonishing rally to new record highs. According to Michael Cuggino, president and portfolio manager of the Permanent Portfolio Family of Funds, “Combined with the macro backstory of declining interest rates, global uncertainty and a weakening U.S. dollar, the environment is bullish for both metals.”
Cuggino also noted that silver is likely experiencing “more aggressive price action [than gold] at this time.” As of September 17, the price of silver has grown 29% in 2024, even outpacing gold’s tremendous rally of 26%.
Analysts believe the silver price rally may just be getting started.
While the same factors propelling gold may likely continue to boost silver as well, additional factors support silver prices.
Industrial demand is one such factor—and it’s a major one. Silver is used in producing much of our technology, especially in the growing field of solar power. Hamad Hussain, assistant climate and commodities economist at Capital Economics, wrote in a note published earlier this month that “silver’s use in the production of solar panels, which has expanded rapidly in China, means that industrial demand also played a key role in driving prices higher.”
Supply deficits are also helping silver. International Banker reported on August 15, 2024, that silver demand “massively exceeded” supply for the third consecutive year in 2023.
Silver does not need to be a substitute for gold. It can also be a complimentary metal.
While gold and silver are certainly related, one does not need to replace the other in a portfolio. They each have their own benefits and driving factors—enough so that owning both can help increase your portfolio’s diversification and help secure and grow your wealth for the future.
Gold may shine brightest when it comes to precious metals, but silver’s time in the sun may just be getting started.
