Both gold and silver have historically been considered as stores of wealth, with silver in everyday use in coins until the seventies.

Unlike gold, silver is enjoying a growing use in manufacturing, the medical and other high tec industries, more than offsetting the diminishing use in photography.

Demand from the jewelry industry remains constant, the gold /silver ratio is out of historical synch (15:1) at around 60:1 and the premium over the silver content in the coin collectors market is said to be near its highest at up to 15%. It is also reported that the physical metal is in short supply but that is likely to be a short-term situation.

Silver enjoyed a surge in after hours dealing in New York last night following in the footsteps of gold. Most of the factors relating to gold mentioned above apply to silver.

However, on balance, mainly due to its growing industrial use, we are buyers of silver at this level. Our preferred vehicle is Ishares Silver Trust (SLV:NYSE) an ETF and holder of the physical metal.

Please remember that we hold positions in these metals and remain optimistic in the medium to longer term. Do please draw your own conclusions, particularly your outlook for the US economy and dollar, and the effects that your expectations will have on gold and silver bullion prices.