Gold reserves its prime position owing to its history and background and its price has soared irrationally based on sentiments. Silver too was appreciating but largely based on its supply and demand condition. In the year 2007, the price of one ounce of gold was around $600, which reached @1250 today. But silver rose to $19 from $15 for corresponding period. It proves that sentiments played a larger role in the case of gold to double its price owing to recession and credit crisis. People started accumulating gold as a hedge against value erosion of their wealth.
Now to think about the future, whether the sentiment- run rally would continue in case of gold or will there be any shift towards silver is a matter of great debate. Silver too has a history like gold in preserving wealth of nations. But silver is scarce than gold as its supply is only one third of latter. Its use in solar cells and nano-technology increases its industrial importance. It is widely used in fabrication, for making utensils and for ornaments. It is poor man’s gold and the affordability further increases its demand. Silver is gradually appreciating by its true value and its demand exceeds supply. There is a growing demand among emerging economies especially China to triple its silver holding. But unfortunately, there is no proportionate effort to enhance its supply; the result being a condition of demand always exceeding supply. Hence, to summarize, silver is likely to remain a star performer and it may even outsmart gold in future.
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