The price of silver has broken the US$60 per ounce mark for the first time, sending the share price of Australian silver companies soaring.
The Australian was reporting on Wednesday morning that the price of silver futures closed up 4.1% in overnight trading to US$60.17, with the price more than doubling over the past year.
Among Australian shares, Andean Silver Ltd (ASX: ASL) was 14.9% higher at $2.15, Silver Mines Ltd (ASX: SVL) was 5.3% higher at 20 cents, and Mithril Silver and Gold Ltd (ASX: MTH) was 5.2% higher at 51 cents.
Shares in Unico Silver Ltd (ASX: USL) were also sharply higher at 67.5 cents, up 10.7%.
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Support looking strong
Minelife analyst Gavin Wendt said in a note to clients in recent days that silver has had a strong couple of weeks, with strong inflows into exchange-traded funds adding more impetus to the price rally.
As he said:
Total additions to silver-backed exchange-traded funds (ETFs) in the four days through Thursday were already the highest for any full week since July, a strong indicator of investor appetite despite signals silver's gains may be overdone.
Mr Wendt said on a fundamental basis, the support for silver would remain strong.
Silver prices have roughly doubled this year, outpacing a 60% rise in gold. The rally has accelerated in the last two months, in part thanks to a historic squeeze in London. While that crunch has eased in recent weeks as more metal was shipped to the world's biggest silver trading hub, other markets are now seeing supply constraints. Chinese inventories are near their lowest in a decade.
Rates move a positive
Mr Wendt said speculation that US interest rates would be heading lower was also a positive for silver, as a lower interest rate environment tended to support the prices of precious metals.
He also said Citigroup analysts were predicting possible further gains.
Silver could rise to US$62 an ounce in the coming three months 'on the back of Fed cuts, robust investment demand, and physical deficit,' Citigroup Inc. analysts including Max Layton wrote in a note.
Mr Wendt said global demand for silver, which was used in a wide variety of industrial processes, had outstripped output from mines for the past five years.
Not just valued as an investment asset, silver also has many useful real-world properties that make it a component in a range of products, such as circuit boards, solar panels and coatings for medical devices.
