Silver looks no more appealing than usual even though the precious metal’s price has rallied in the past six weeks, according to Russ Koesterich, BlackRock Inc.’s chief investment strategist.
The CHART OF THE DAY tracks the silver price in New York trading and highlights a 16 percent advance from this year’s low, reached on May 30. Yesterday’s increase of 44 cents an ounce, to $21.508, was the biggest in three weeks.
“Though silver may be somewhat more interesting than gold, I’m not convinced that this is a market that most investors want to chase,” Koesterich wrote in a posting on BlackRock’s blog.
Precious metals face “a tougher second half,” he wrote, because interest rates are poised to rise after accounting for inflation. The yield on the Treasury’s inflation-linked 10-year notes fell to 0.24 percent yesterday from 0.77 percent when the year began, according to data compiled by Bloomberg.
Silver may suffer more in any decline because the metal is prone to bigger price moves, according to Koesterich’s posting four days ago. He cited figures showing its annual volatility for the past four decades averaged about 35 percent, which surpassed gold’s 20 percent.
“I believe that most investors should always have a small allocation to precious metals,” the New York-based strategist wrote. “It’s not clear that this is the time for a dramatic increase in the allocation to either metal.”