Supply and demand
Silver is commonly accepted as a monetary metal, but nowadays its principal use is industrial. According to The Silver Institute, supply of mine and scrap recycling totals 980 million ounces, while physical demand is 1,080 million ounces, of which about 246 million is bars and coins. Silver's characteristics are hard to substitute by using other metals, so the silver price can increase somewhat without reducing industrial demand.
Isaac Newton set the monetary relationship between gold and silver at 15.5 times when he was Master of the Royal Mint nearly 300 years ago. When silver and gold were in circulation as monetary metals the relationship generally held between 14-16 times. Today the ratio is about 73 times.
If the gold price rises to reflect growing uncertainty about the purchasing power of government currencies, it stands to reason that silver will also rise towards Newton's monetary relationship. However, this would require lost industrial demand at far higher prices to be absorbed by sales of coins and bars.
Silver's price volatility relative to gold is about two times, so in a rising market a good way to get price leverage on gold is to buy silver. This should interest buyers who feel they have missed the bottom of the gold market and want to catch up on the implied loss. Of course, if the price of gold falls, the losses in silver can be expected to be correspondingly greater.
Following the end of the gold standard and its replacement with government currencies, there have been many occasions when gold ownership has been banned. Today this may seem unlikely, but confiscation may become increasingly possible if monetary conditions deteriorate in the future. As silver is predominantly an industrial metal, it should offer protection against this possibility.