As global currencies are now playing the part of snappy, bellicose sick children and fears the fragile recovery is up against fresh challenges rise, commodities like gold and silver are witnessing a surge in demand.
The precious metals are considered safe haven investments when financial markets are roiled and things look uncertain. Gold prices soared 20 percent this year while silver prices were up a staggering 31 percent.
On Monday spot silver prices galloped to $22.13 an ounce, a fresh 30-year high.
The performance of silver outsmarted even the gold gallop, proving the potential of the unheralded metal as an investment option.
Data show the gold-silver ratio, which demonstrates how many ounces of silver it takes to purchase one ounce of gold, dropped to below 60, its lowest level over a year.
"As you can see, a break out from a symmetrical pattern managed to propel it (silver) towards the uncharted territory. With its uptrend line still well intact, it would most likely continue to head north," writes analyst Ron Acoba.
Acoba says if the Federal Reserve increases the money supply through quantitative easing it will result in an anemic dollar, boosting in turn the attractiveness of gold and silver investments.
He also says risk appetite sparked from optimism in other regions of the world also places a lot of downward pressure on the greenback.
"If these two factors, Federal QE and negative sentiment on the dollar, continue then the demand for gold as well as silver would likely remain at least in the near term."
He cautions that in the interim the price of silver could weaken given its 'overbought conditions'. But he says in such a scenario, its previous high and its uptrend line should act as supports to prevent the commodity from crashing.
Phillips Baker, the head of Hecla Mining, said recently he expected silver prices to rise substantially in tandem with the gold price.
He said the demand for silver is witnessing significant rise since the world came narrowly out of the recession.
"I have the view it is going to go up substantially and I certainly would not be surprised to see $25 to $30 (within a year)," Baker told Reuters in an interview on the sidelines of the Denver Gold Forum.
However, it's worth noting that silver had tumbled from its 2008 highs, suggesting that in the absence of a demand driven rally, silver prices could come under pressure.
But Acoba vouches for the poor man's gold.
"The sky is the limit for this second-tier metal and with its price far cheaper than of gold (presently trading below $22.00 per ounce), it has a greater propensity between the two, in my opinion, to deliver handsome gains," Acoba, who is also the co-founder and managing partner of Laidtrades.com, writes.
