Is Silver a ‘Strong Buy’ Right Now? This Analyst Thinks So…

Sarah Benali  Thursday May 18, 2017 14:48

While silver prices seem to be lagging, it may be time for investors to love the grey metal again, one analyst points out.

“Investment in gold (and silver even more so, are worthy of very careful consideration),” said Matthew Worley, research analyst and economic contributor for London-based World First, in a Seeking Alpha post Thursday.

“In an investment environment where central banks have flooded monetary reserves, equities are hitting all-time highs, 10 year U.S. Treasury yields barely eclipse 2%, and real estate markets show excesses internationally, take a long look at assets undervalued and unloved. It just makes sense.”

Silver has fallen under pressure this week after hitting multi-week highs as the metal fails to attract safe-haven demand like its sister metal gold. July Comex silver futures settled at $16.67 an ounce, down 1.39% on the day. Meanwhile, gold’s 5-day rally came to a halt Thursday with June gold futures settling down at $1,252.80 an ounce.

To Worley, gold and more so silver, remain valuable assets for investors and the latter is a “strong buy” right now.

“Gold and silver have remained valuable commodities for millennia, and inflation buoys their prices, making them true holders of objective value,” he wrote.

“The disparity of the price of silver versus gold is what currently makes physical silver a strong buy,” he added.

Worley explained that the current gold-to-silver ratio, which comes in at about 75:1 is far off from the ratio it should stand at. As an example, he highlighted that from a supply/demand perspective, some analysts suggest the supply in the Earth's crust of silver to gold lies at around 16:1.

“If both the ratio contracts and the equity markets head south, silver stands to make a massive profit,” he said. 

According to Worley, there are other reasons for owning silver right now: it is a good inflation hedge, it has a track record of holding value and premium pricing in other asset classes favors holding silver.

By Sarah Benali