Silver Near Record Levels, but Croatians Still Avoid It

Silver in recent months, along with gold, has been reaching record levels. Although it has not yet broken its historical peak, this precious metal is at its highest levels compared to the last few decades. At the time of writing this article, its price is at $44.3 per ounce, while it closed trading above $44 per ounce yesterday, the first time since 2012.

However, the record title is still held by the amount of $49.95 per ounce that this metal achieved in mid-January 1980, said Davor Žic, CEO of Auro Domus, for Lider.

– In August 2011, an ounce of silver reached $47.94, and now we have a situation where these historical peaks could be ‘tested’ and even surpassed – claims Žic.

Generally speaking, he continues, the price of silver follows the price of gold, with a certain shift in trend. As gold is currently breaking records, daily pushing the boundary, it is now above $3780 per ounce, the entire precious metals sector follows it, especially silver.

– However, given that silver has a greater application for industrial purposes than gold, as a larger share of the annual volume goes to industrial uses and a smaller share to investment purposes, the trend that is happening with gold is followed by silver with a certain ‘distance’. In the trading of precious metals, the ratio of the price of silver to gold, the so-called gold/silver ratio, is monitored. If it is above 80, silver is considered undervalued and its growth is expected to be faster than the growth of the price of gold. With values below 50, silver is considered overvalued. The current ratio is around 1:86 in favor of gold, which is why we can expect not only further growth in the price of silver, driven by the anticipated further rise in the price of gold, but also acceleration relative to gold – states Žic.

Žic adds that the rise in precious metal prices is driven by economic uncertainties, war conditions, and political instabilities, which we have witnessed over the past five years, peaking in the last month when the price of gold rose by more than 11 percent.

– According to analysts’ expectations worldwide, it is realistic to expect gold to rise above four thousand dollars per ounce, and it is not impossible for the value of an ounce to rise above five thousand dollars. A similar trend, but likely with a somewhat steeper growth trajectory, could also be seen in silver – concludes Žic, noting that unlike gold, silver is subject to VAT in Croatia, making it a less attractive investment for private citizens, although it would be ideal for entering the world of precious metals due to its lower price compared to gold.