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Investors are pouring into silver and platinum as they seek “gold alternatives” and hedges against the US dollar, sending prices for both metals soaring.
With the US dollar’s status as a safe haven for global capital under threat, gold has enjoyed a historic rally, surging 25 per cent since the beginning of the year as investors use it as a hedge against uncertainty.
However, amid concerns that gold may now be overvalued, other precious metals such as silver and platinum are starting to catch up. Silver prices have surged to a 13-year high, and platinum prices are at their highest levels in four years, with both metals up more than 10 per cent this month.
“Gold is the preferred dollar hedge, and this is the next iteration of that trade,” said Nicky Shiels, analyst at MKS Pamp, a bullion refiner. “Gold has almost doubled [in the last two years], and it is the ‘what’s next?’ mentality.”
Shiels said concerns about excessive US government borrowing were pushing investors to seek alternatives to the dollar.
Silver, which is used in coins as well as for industrial processes, is on track for its best month in more than a year, with prices currently above $36 per ounce.
Investments into silver-backed exchange traded funds have sharply accelerated, with more than 300 tonnes of inflows so far in June, compared with 150 tonnes of inflows last month.
“This does feel like a catch-up flow in platinum and silver, relative to gold,” said Suki Cooper, precious metals analyst at Standard Chartered.
The gold-to-silver ratio, which has historically been around 65, is now at 93, suggesting that silver is cheap relative to gold, she said.
Unlike gold, silver and platinum have significant industrial uses, and demand for both metals is expected to outstrip supply this year. Silver is used in manufacturing processes such as soldering and making solar panels, as well as in batteries and glass coatings.
Platinum prices rose to a high of $1,273 per ounce this week, and are up 18 per cent since the beginning of the month, putting June on track to be the best month for platinum since 2008.
Platinum metal demand is spread between automotive catalysts (40 per cent), jewellery (26.5 per cent) and other industrial applications (26 per cent), according to data from the World Platinum Investment Council.
The slower-than-expected adoption of electric vehicles has been a boon for platinum demand, because petrol and hybrid cars both use platinum in their catalytic converters.
High gold prices have also boosted demand for platinum jewellery as a consumer alternative. Chinese platinum imports ticked up in April, indicating a renewed interest in platinum jewellery there.
Platinum was facing a third straight year of structural deficit, and prices were only now starting to rise in response to that deficit, because the availability of above-ground platinum stocks had been depleted recently, said Cooper.
“We expected both silver and platinum to be in quite a deep deficit in 2025,” said Cooper. “So there is support for more upside.”
Investor demand for platinum has also been on the rise, with platinum ETFs seeing 70,000 ounces of inflows since the beginning of the year.
