Silver is a better hedge than gold

FOR centuries, silver, not gold, was the reserve currency of choice. Its legacy lives on, with cashier signs in Chinese department stores which literally say "pay silver here", and with the Chinese word for banks translating literally as "silver company".

Today, silver offers the rewards often associated with gold, but with greater leverage. There was a good correlation with gold but that weakened during the Covid lockdown period. Silver returned around 150 per cent from its 2020 lows whilst gold delivered 43 per cent over the same period.

In the past, the activity in silver tends to lead the activity in gold by a week or so and this meant that silver was often used as a guide to how gold would perform. So rather than trading silver, traders waited, and traded the same action when it developed in gold.