Silver Prices Are Outpacing Gold. That’s a Good Sign for the Global Economy.

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Silver has sharply outpaced gold’s gains in the past three months, and its classification as both an industrial and precious metal may lead it on a path to even higher prices.

From Oct. 31 to Jan. 31, Comex silver futures climbed nearly 25%, outpacing gold’s almost 19% climb, a “statistically unusual amount that shows the precious metals market is bullish on global economic growth in 2023,” wrote Nicholas Colas, co-founder of DataTrek Research, in a Jan. 25 report.

He pointed out that silver is primarily an industrial metal, while gold is used mainly as an investment and for jewelry—so the better performance for silver prices supports the idea that the “global economy is in better shape than feared in mid-2022.” Colas attributes that primarily to China’s reopening and said that is “shaping up as a central investment theme” for the first months of this year.

Much of the hype over China’s economic reopening centered on oil and prospects for higher energy demand, temporarily lifting crude to its highest prices since November.

Many industrial metals have also gained as Covid-related restrictions have eased in China, the world’s biggest metals consumer. Copper and iron-ore futures on Comex each climbed by nearly 11% in January.

Silver’s outperformance over gold in the past three months is “primarily due to real or perceived future demand for silver due to industrial usage factors such as the reopening of China and other slowly awakening economies, supply constraints, and expected increase in overall demand,” says Michael Cuggino, president and portfolio manager of the Permanent Portfolio Family of Funds.

But that’s not the whole story.

The demand increase for silver is expected to come from not only conventional industrial needs, such as construction and technology, but also from the global push toward clean-energy production and related goods such as electric vehicles, says Cuggino.

Michael Gayed, portfolio manager of the ATAC Fund Family and publisher of the Lead-Lag Report, points out that there’s also a “broader risk-on sentiment taking place globally as emerging markets outperform, U.S. discretionary stocks lead, and domestic commodity plays like lumber surge on growth expectations and a housing pickup.”

Given all that, the move up for industrial metals so far this year is only partly attributable to China’s recovery, he says.

Silver’s value as a precious metal is also likely to support prices. Comex silver futures settled at $23.609 an ounce on Feb. 1.

Keith Weiner, founder and CEO of…