Silver is one of the best investments of 2016. The commodity is up 22% so far, outshining gold which is up 18% during the same period.
On Tuesday, silver increased by an impressive 4.5% to reach its highest level in 11 months.
Precious metal experts have been complaining for weeks that silver has been trading below its true value.
Typically gold trades around a 60 to 1 ratio above silver. Recently that number had reached 80 to 1.
According to experts, the massive spike on Tuesday allowed traders to fix the 80 to 1 gap.
Some experts believe silver prices are spiking because China’s economy seems to be stabilizing. That stabilization should increase demand for silver in China.
Because silver prices are driven by industrial factors, any improvement in China’s industrial complex is likely to increase silver prices.
Silver has also been helped along by negative interest rates in Europe and Japan, and global concerns about deflation. Gold and silver are often seen as safe investments during periods of economic uncertainty.
Not every analyst believes silver is a smart buying decision. “Silver peaked in 2011. It’s only gone down since,” says Wells Fargo commodities expert John LaForge. “I don’t see anything saying, oh, the fundamentals are changing.”