Silver prices have jumped in recent weeks, capping off the best month in over two decades. The shiny metal that normally takes a back seat to gold is buoyed by industrial demand, and therefore, was hit hard when commodity prices collapsed last year.
Recent signs that the global economy will emerge from the worst slump since the 1930s has spurred some investors to scurry into the metal. In addition, weakness in the dollar has also encouraged some of the run-up.
On the other hand, gold has limited industrial uses and is mostly considered a hedge against inflation and economic uncertainty. Hence, the rise has been tepid in comparison.
The near meltdown in financial markets last year underpinned the yellow metal, and worries that massive fiscal stimulus and pump-priming by central banks will ignite inflation next year have also lent support.
What about platinum?
According to the NYMEX, platinum is among the world’s scarcest metals and production totals only about 5 million ounces per year, while gold tops 80 million ounces. It is also considered a precious metal, and like gold, is used in the production of jewelry.
But catalytic converters accounts for 29% of annual usage, and with automotive production flattened by the recession, I suspect that the weak recovery in price is tied to the outlook for the auto industry.
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