The price of silver has exploded on Tuesday and is trading at its highest level in ten months.
Just after 11:00 a.m. BST (6:00 a.m. ET) the metal synonymous with finishing second is the biggest gainer of all major commodities, up by more than 3% on the day. It is trading at roughly $16.75 per ounce.
Here’s how that looks:
The cause of silver’s rally looks to be a correction in the trading ratio between gold and silver. Traditionally, silver prices track gold carefully, meaning that when gold rises, so does silver. However, this year, silver prices have lagged a little behind.
At the start of April, gold had gained more than 13% on the year, while silver was up just 8%. However in the past couple of weeks, silver has started to gain momentum, as investors look to close the appreciation gap between the metals.
As UBS analyst Joni Teves puts it, as quoted by the Financial Times: “It’s a combination of silver getting a bit of attention over the past week with the big move in the gold/silver ratio and quite a few market participants looking at silver in and its relative performance to gold and thinking it might be time for a bit of catch up.”
Gold has been garnering most of the attention in markets in recent months, enjoying its most successful quarter in 30 years in Q1 of 2016.
The safe-haven metal appreciated hugely in the first quarter, driven by high market volatility and a weakening dollar, however on Tuesday, it is silver that is in focus, with gold pulled higher by silver’s surge. It is up by roughly 0.8% on the day. Platinum, one of few metals more expensive than gold, has gained just less than 1.9%.
Strong metals on the day are helping boost Europe’s miners. On the FTSE 100, Anglo American, Fresnillo, and BHP Billiton are amongst the biggest gainers.