Here’s why silver is crushing gold

2016 has been a good year for precious metals, particularly silver and gold, but when comparing the two of them the grey metal has clearly outperformed bullion — it is up 40% to date, while its sister metal has only gained about 28%.

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Silver is up 40% to date, while gold has only gained about 28%.

For some such as Michael Steinmann, chief executive officer of Pan American Silver (TSX:PAA) (NASDAQ:PAAS) — the world’s second largest producer of the metal —, silver will continue to crush gold into 2017, partly thanks to its use in solar panels and electronics.

Speaking to CNBC’s Squawk Box Wednesday, Steinmann acknowledged that while the US Federal Reserve’s potential move to hike interest rates by December will have an immediate effect on the metal, its long-term fundamentals remain strong.

“Every phone, every screen, every light switch contains silver,” he said. “In the future, a focus on clean energy will help boost silver prices,” Steinmann noted.

Investors have flocked to the metal in recent months, with hedge funds expanding their bullish bets on silver to an all-time high in May, as reported by Bloomberg.

Demand is not expected to recede any time soon, but quite the opposite. According to data compiled by GFMS for the Washington-based Silver Institute, about half of global silver consumption last year was related to the metal’s industrial use, including smart phones, flat-screen TVs, solar panels and alloys and solders.

“Silver demand had a phenomenal 2015 with retail investment and jewellery fabrication both reaching all-time highs,” wrote Frank Holmes of US Global Investors last month.

And as average incomes surge and high-technologies becomes more and more available to the masses, demand for silver is expected to increase even further, pushed as well by new uses being found for the metal’s anti-bacterial and reflective properties in everything from hospital paints to long-life batteries and flexible screens.

Vancouver-based Pan American Silver has mines and other projects in the United States, Mexico, Peru, Bolivia and Argentina.

Here’s why silver is crushing gold — Pan American Silver CEO

Courtesy of Kitco Metals.

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Silver Seek

Various authors reporting on the silver precious metals market.