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UBS sees silver gaining as gold remains defensive

UBS sees silver gaining as gold remains defensive

Grafa2024/11/07 07:37
By: Mahathir Bayena

UBS has highlighted silver’s potential to outperform gold amid economic shifts, citing its dual role as a hedge and growth asset.

In a recent note, Julian Wee, an investment writer at UBS, noted gold's impressive 35% increase year-to-date.

Gold’s status as a safe haven remains strong, bolstered by demand from Asian central banks and inflows from North American ETFs.

UBS projects gold could reach $2,900 per ounce by September 2025, maintaining its defensive appeal against economic slowdown and inflation.

“Gold is not the only precious metal whose price demonstrates an inverse relationship to risk aversion,” Wee pointed out, suggesting investors consider diversifying with silver.

Silver, unlike gold, benefits from its industrial applications, which are expected to thrive alongside resilient U.S. GDP growth.

“Investors might do well to consider an addition to portfolios that retains a good amount of defensiveness, while also incrementally adding to the ability of these portfolios to benefit from stronger economic growth: silver,” Wee highlighted.

UBS forecasts silver prices to rise to $36-$38 per ounce by 2025.

“We thus expect prices to reach USD 36-38/oz in 2025, and advise investors to stay long the metal or use it for yield pickup opportunities,” Wee advised.

Silver’s applications in technology, electric vehicles, LEDs, and medical devices enhance its growth appeal.

Additionally, Wee sees a potential “no landing” scenario, where continued GDP growth occurs without a recession, positioning silver to benefit from both defensive and economic growth-driven demand.

Wee also projects the gold-silver price ratio to decrease from 84 to the mid-70s within the next year, indicating silver’s possible outperformance.

This makes silver a compelling choice for investors seeking to balance risk and capitalise on growth opportunities.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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