Driven by increased buying from Asian investors, silver broke through
the $21 per troy ounce barrier July 4 before closing on the London
exchange at $20.36.
The closing PM spot price is the highest since the metal closed at
$20.69 per ounce on July 31, 2014.
Mining.com credits the rise in the silver price to
the anticipation of additional monetary stimulus initiatives pursuant
to the U.K.'s referendum to exit the European Union, a move nicknamed
"Brexit" for short.
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Since the June 23 referendum, the silver price has climbed 17
percent on the New York Mercantile Exchange, Mining.com reports.
The recent surge in silver is still 60 percent below the closing
spot price of the metal in the spring of 2011, when it reached over
$49 an ounce.
What does Brexit have
to do with silver prices?
Silver and gold investing has historically been viewed as a hedge
against the unpredictability of the overall economy, and in turn, a
safe haven when other markets experience a downturn.
If and when the U.K. does indeed leave the European Union, there are
concerns that it would disrupt the U.K. economy and possibly the
entire European economy, which would have effects on the entire global economy.
So investors are looking for that safe haven.
The more demand there is for silver around the world, the higher the
spot price goes.
Precoius metals are valuable. That is based on the fact that we know
there’s not a lot of it, and we know it is appealing to people. So
while the health of someone’s investments in the stock market is
subject to the performance of the companies invested in, silver is a
known commodity with a value that, generally does not fluctuate with
the suddenness that a company’s stock, or a nation's currency can, can.