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If You Like Gold, Check Out Silver

Written By Brian Hicks

Posted September 10, 2012

We’ve known that gold has been a safe haven for investors for quite some time, but another precious metal has been breaking out.

Currently, silver futures are trading over $32.60 per ounce (that’s a rise of 18 percent for the quarter and 17 percent since the year began). In comparison, gold, which is trading at over $1,700 per ounce, has gained barely 6 percent this quarter and less than 9 percent through the year.

Of course, both silver and gold have benefited from increasing speculation surrounding monetary stimulus action decisions from the European Central Bank and the U.S. Federal Reserve. Such actions have a tendency of devaluing currency.

From MarketWatch:

“Investors see precious metals like silver and gold as hedges against the debasement of paper currencies,” said Elliott Orsillo, co-founder and portfolio manager at Season Investments LLC.

Orsillo warned that the market might have gotten a little ahead of itself regarding those expectations. “We could see a pullback and a better entry point [for silver] in the next couple of weeks,” he said, noting that silver tends to be more of a “high-beta play,” much more volatile than gold.

Not that long ago, gold soared to almost $1,900 and silver to $50 per ounce, riding on the second round of quantitative easing undertaken by the Fed in 2011. Another such round could easily see both metals surpass their 2011 highs, some analysts speculate.

But the risks for silver are greater because it isn’t really seen on the same level of prestige as gold, and its reputation as a mostly-industrial metal doesn’t help. The metal has seen a good year so far, and it may keep going, but that also increases the risk of a sudden withdrawal.