Listen to the article
Since the beginning of the year, record spikes in the prices of gold, and more recently, silver, have been making headlines.
The prices of both gold and silver are closely correlated, influenced by shared macroeconomic conditions and currency risk hedging strategies.
5% Profits
But in the current context, the price of silver seems to be rising more strongly and rapidly than that of gold.
The price of an ounce of silver has climbed by over 5% in a week and by a quarter over the first five months of 2024. By crossing the psychological barrier of $30, it will have hit its highest level in over a decade, having briefly surpassed it in 2021.
Wednesday afternoon, the price of gold hovered around $2,412 per ounce, while that of silver fluctuated around $31.2. These prices yield a gold/silver ratio of 45, meaning one ounce of gold for every 45 ounces of silver.
Physical Trait
For many experts, silver offers a twofold advantage, drawing its value from its use as a financial asset and as an industrial raw material.
There is a strong demand for silver as a physical commodity.
The white metal has made a grand entrance into the manufacturing of clean energy technology. Silver plays a crucial role in the photovoltaic industry, and with significant growth projected in this sector, the use of silver is expected to hit a record high this year, according to the Silver Institute, an international association founded in 1971, with members spanning all sectors of the silver industry.
Ever Shining Gold
That being said, the yellow metal still shines brightly. Again on Tuesday evening, it asserted itself as a safe haven amidst the geopolitical disruptions triggered by the announcement of the death on Sunday of Iranian President Ebrahim Raisi in a helicopter crash in Azerbaijan. The market reaction was immediate, albeit short-lived. The price of gold slightly lost ground. “An expected reaction,” commented an expert interviewed by This Is Beirut. The expert noted that the markets’ long-term reaction will depend on the version of events provided by Iranian authorities regarding Raisi’s helicopter accident.
It’s worth mentioning that in 2024 the price of gold hit a record high due to many underlying factors.
In this regard, it’s important to mention the heightened geopolitical tensions, such as the ongoing war in Ukraine and the conflict between Israel and Hamas.
Central banks worldwide are increasingly diversifying their assets to reduce dependence on the US dollar. In the first three months of 2024, central bank gold purchases totaled 289.7 tons.
According to the World Gold Council, the Chinese central bank alone acquired 225 tons of gold. In March, China’s gold reserves increased by 5 tons, bringing the country’s total stock to 2,262 tons.
Today, more so than ever, many Lebanese are turning to international markets for investment opportunities, especially in precious metals. And for good reason! This shift is driven by the sluggish performance of the Beirut Stock Exchange, which offers limited choices due to the small number of listed companies.
