(Kitco News) - Gold prices have pushed back into familiar territory above $3,300 an ounce, while silver prices continue to consolidate above $36 an ounce. One portfolio manager says both precious metals have room to run higher.
In an interview with Kitco News, Ryan McIntyre, Senior Managing Partner at Sprott, said that while he remains bullish on gold, he is currently paying a bit more attention to silver in the near term.
McIntyre’s bullish outlook comes as the gold/silver ratio trades below 92, down sharply from April’s multi-year highs above 100. Spot silver last traded at $36.40 an ounce, up more than 1% on the day. Meanwhile, spot gold last traded at $3,344.28 an ounce, up 0.24% on the day.
Easing fears of a global economic recession and reduced trade tensions are supporting silver's cyclical industrial demand, while gold continues to consolidate. McIntyre said he expects both silver and gold prices to trend higher as retail investors continue to seek assets that protect their wealth and purchasing power.
He noted a slightly more optimistic stance on silver in the near term, as the metal still needs to catch up to gold’s performance. While silver isn't held as a reserve asset by global central banks, it remains a significant monetary metal among retail investors.
“Gold remains the ultimate global currency,” he said. “But right now, silver is an attractive value play. For me, gold will always have a permanent position in a portfolio. Silver comes in on a tactical basis, on a value proposition basis.”
Although many investors focus on silver’s industrial consumption—which makes up 60% of the market and continues to drive a significant deficit—McIntyre emphasized its important role as a hard asset.
He pointed out that rising government debt is creating sovereign risk across the global economy. These risks are attracting growing attention as investors shy away from government bonds and turn toward alternative monetary assets.
“Governments continue to run huge deficits relative to GDP, and people are starting to realize that the math doesn't add up,” he said. “The financial situation should scare people, and when that happens, we’ll see more capital move out of equities and into hard assets. With gold above $3,000 an ounce, investors will start to look for value in silver. I expect that gold will continue to rally, and it will drag silver higher regardless of industrial demand impacted by economic activity.”
McIntyre’s warning comes as U.S. government debt surpasses $37 trillion. Meanwhile, the U.S. Senate has just passed a new budget bill that could potentially increase the deficit by $3 trillion over the next 10 years, according to the U.S. Congressional Budget Office.
The legislation now heads to the House of Representatives.
McIntyre said gold could consolidate around $3,300 an ounce through the summer as investors adjust to higher prices. However, he added that rising debt remains a significant risk to equity markets.
“Everyone says gold is overvalued and overcrowded. I don’t see it as any more overcrowded than the S&P 500,” he said. “There are still a lot of people who could move into this space compared to equities—and some of them will be attracted by the value in silver.”
