Silver on a run
Silver prices seem to be on a run over the past few days. Silver hit its two-year high of $21 per ounce on Monday, July 4, 2016. All precious metals rose after the Brexit vote on June 23 gripped the Markets and uncertainty was high.
Gold rose, but silver overpowered it in the rally. Some investors are expecting a better run for silver than gold in 2016. Since the Brexit vote, silver has risen about 19%. Gold has maintained its 8% rise over the period.
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Silver’s industrial demand
Despite the recent and sudden gains in silver prices, silver is still considerably lower than its 2011 peak of $49 per ounce. Silver likely plays a dual role as an industrial metal as well as a precious metal. Insecurity in the Markets gives a lift to the precious metal demand. And industrial stability, which is reflected in the equity Markets, is also helping silver. So a rise in equities or an increase in haven demand can both significantly influence silver.
Miners are following the trend
The rise in the price of precious metals over the past few days significantly helped mining-based stocks. Miners such as Newmont Mining (NEM), Barrick Gold (ABX), and Goldcorp (GG) have risen 7.1%, 6.1%, and 8.6%, respectively, on a five-day trailing basis. Together, these three giant miners contribute 19.6% to the fluctuations in the VanEck Vectors Gold Miners ETF (GDX).
Leveraged mining funds such as the Direxion Daily Gold Miners Bull 3X ETF (NUGT) and the ProShares Ultra Silver (AGQ) increased significantly by 30.1% and 25.5%, respectively, on a five-day trailing basis.