Gold prices have rebounded into a familiar range above $3,300 an ounce, while silver continues to consolidate above $36 an ounce. One portfolio manager says both precious metals have room to run higher.

Ryan McIntyre, senior managing partner at Sprott, said that while he remains bullish on gold, his focus on silver has increased recently.



McIntyre’s optimistic outlook comes as the gold-silver ratio is below 92, well below multi-year highs above 100 reached in April.

Easing fears of a global recession and easing trade tensions support cyclical industrial demand for silver, while gold continues to consolidate. McIntyre expects both gold and silver prices to move higher as retail investors continue to seek assets to protect their wealth and purchasing power.

He noted that the recent outlook for silver is slightly more bullish as it still needs to catch up to gold’s performance. While silver is not a reserve asset for central banks around the world, it remains an important monetary metal in the eyes of retail investors.

“Gold remains the ultimate global currency, but at this point, silver is an attractive value investment,” he said. “For me, gold will always have a permanent place in a portfolio, silver is entered on a tactical basis, on the basis of the value proposition.”



While many investors focus on silver’s industrial consumption, which accounts for 60% of the silver market and continues to create a huge deficit, McIntyre stressed the metal’s important role as a hard asset.

He noted that rising government debt is creating sovereign risks in the global economy, which are attracting increasing attention as investors shun government bonds and turn to alternative currency assets.

“The government continues to run large deficits relative to GDP, and people are starting to realize that the numbers don’t make sense,” he said. “The financial situation should spook people, and when that happens, we’ll see more capital flow from stocks into hard assets. With gold breaking through $3,000 an ounce, investors will start to find value in silver. I expect gold prices to continue to rise, and regardless of the impact on industrial demand from economic activity, gold prices will pull silver prices higher. ”

McIntyre's warning comes as the U.S. government debt exceeds $37 trillion and the U.S. Senate just passed a new budget bill that could add $3 trillion to the deficit over the next decade, according to the Congressional Budget Office (CBO).

The bill is now before the House of Representatives.

McIntyre said gold prices could consolidate around $3,300 an ounce over the summer as investors adjust to higher prices, but he added that rising debt remains a significant risk for stocks.

“Everyone says gold is overvalued and overcrowded, and I don’t think it’s any more crowded than the S&P 500,” he said. “There are still a lot of people who could potentially get into this space compared to the stock market, and some of them will be attracted to the value of silver.”


Spot gold daily chart source: Yihuitong

At 10:17 am Beijing time on July 3, spot gold was quoted at $3,348.64 per ounce