The price of silver has exploded on Tuesday and is trading at its highest level since May 2015
Just after 2:20 p.m. BST (9:20 a.m. ET) the metal synonymous with finishing second is the biggest gainer of all major commodities, up by more than 4.9% on the day. It is trading at roughly $17.02 an ounce. Silver gained 3% in early trading but has continued to jump.
Here's how silver looked a few minutes ago:
The cause of silver's rally looks to be a correction in the trading ratio between gold and silver. Traditionally, silver prices track gold carefully, meaning that when gold rises, so does silver. However, this year, silver prices have lagged a little behind.
At the start of April, gold had gained more than 13% on the year, while silver was up just 8%. However in the past couple of weeks, silver has started to gain momentum, as investors look to close the appreciation gap between the metals.
As UBS analyst Joni Teves puts it, as quoted by the Financial Times: "It's a combination of silver getting a bit of attention over the past week with the big move in the gold/silver ratio and quite a few market participants looking at silver in and its relative performance to gold and thinking it might be time for a bit of catch up."
Gold has been garnering most of the attention in markets in recent months, enjoying its most successful quarter in 30 years in Q1 of 2016.
The safe-haven metal appreciated hugely in the first quarter, driven by high market volatility and a weakening dollar; however, on Tuesday, it is silver that is in focus, with gold pulled higher by silver's surge. It is up by roughly 1.75% on the day. Platinum, one of few metals to cost anywhere near as much as gold, has gained just less than 3.55%. Palladium, another rare metal, closely related to platinum, is up 2.7%.
Eurasian Resources Group S.a.r.l. plans to use a $2.2 billion project in the Democratic Republic of Congo to become the world’s top cobalt producer and tap growing demand for batteries from companies including Tesla Motors Inc.
ERG, which earlier this month agreed on $700 million of Chinese funding for the project, has started construction and aims to complete it within 20 months, according to Chief Executive Officer Benedikt Sobotka. He sees the company becoming the largest cobalt producer when full capacity is reached. Chinese producers currently vie with each other for the top spot.
Cobalt prices should advance “significantly” in the next two years as demand for the metal used in rechargeable batteries increases, Sobotka said. The battery market is expanding as more consumers turn to electric and hybrid cars and look to store renewable energy to power appliances when there’s little wind or sunshine. Daimler AG and Tesla said they plan to sell batteries storing energy to homeowners and businesses.
“Given that companies such as Tesla are expanding and increasing the use of batteries, our project has very good prospects," Sobotka said in an interview last week.
Luxembourg-registered ERG owns Eurasian Natural Resources Corp., which delisted shares in London in 2013 amid a fraud probe. It controls assets in Kazakhstan, Europe, Africa and Brazil and is 40 percent owned by the Kazakh government with the remaining held by private investors.