Silver prices surged to their highest level in seven years this week as record low interest rates and a falling U.S. dollar sent investors rushing into other safe haven assets.
The metal is up 28% so far this year and gained 18% to hit a high of $23.24 this week, a level not seen since October 2013.
This jump is even outpacing the gains seen in gold, which is up around 24% this year and close to breaking above its all-time high reached back in 2011.
The rush to buy precious metals comes as investors seek reliable stores of value amid fears about the global coronavirus pandemic, concerns about the economic recovery, and amid rising tensions between the world’s two largest economies. The weaker U.S. dollar is also making it cheaper for investors to buy precious metals, alongside interest rates at or near zero making other traditional safe havens—like Treasuries—less attractive.
“It seems the precious metal has been caught up in the perfect storm,” said Jeroen Blokland, senior portfolio manager at Robeco Asset Management.
“The catalyst of the recent rally, however, seems to be the fact that the world is aiming for a ‘green’ recovery, with a significant part of the stimulus assigned to environmentally friendly measures,” Blokland added. “As silver has a wide range of industrial uses, including electronics and solar panels, demand for this metal should rise form this angle as well. We remain overnight commodities as the outlook for both industrial and precious metals looks bright.”
Pan American Silver, which is the larges silver miner of the three, is up nearly 9% over the last week, while Cueur and Hecla are up 26% and 21%, respectively in the same time frame.
Both RBC Capital and B. Riley FBR upgraded Hecla recently. RBC boosted the stock from Underperform to Sector Perform and a price target of $4.50 citing forecasts for higher silver prices and higher implied multiples that are more in line with the stock’s historical ranges and peer averages, while B. Riley FBR raised the stock to a Buy from Neutral given that Hecla’s operations are largely running ahead of full-year guidance despite coronavirus-related interruptions in both Canada and Mexico.
And earlier this week, Canaccord Genuity analysts lifted their rating on Coeur from Hold to Buy on potential returns to target prices.
Hecla and Pan American Silver are both up more than 50% so far this year, and while Coeur is down nearly -8% year-to-date, it is up 55% over the last year as silver prices have soared.
“Silver is starting to outperform gold,” said IG Markets analyst Kyle Rodda. “On the one hand, it’s obviously appreciating on the basis of increased appeal for precious metals. On top of that, there’s likely an element of silver catching a bit on a rebound in global industrial activity.”
“The silver price is rising because of its duality as not only a valuable investment, but also as an industrial metal,” added Michael DiRienzo, executive director of the Silver Institute, “interest in silver has risen to levels we have not seen in some time.”