Hi-ho Silver!

White metal looks to outpace gold again, thanks to its industrial uses

NEW YORK (MarketWatch) -- Silver, which has topped gold and platinum to become the fastest rising precious metal this year, has a chance to keep outperforming thanks to its double use as both an inflation hedge and industrial material, analysts are forecasting.

But with higher returns come greater risks. Silver has proved much more volatile than gold, partly because fewer people trade the white metal than gold.

If "prices of precious metals turn higher across the board, silver will tend to move up faster," said Neil Meader, research director at London-based precious metals consultancy GFMS.

"If all the prices come off, you will see silver prices collapse much faster," he said.

The London fixing, a global benchmark for silver's spot trading, has rallied nearly 50% this year to near $16 an ounce, the highest level in 10 months, as investors piled into coins, bars, and silver exchange-traded funds such as iShare Silver Trust. Holdings in iShare Silver /quotes/comstock/13*!slv/quotes/nls/slv (SLV 15.65, +0.51, +3.37%) hit a record high this week.

The year-to-date gain in silver easily outpaced gold's 12% advance and has also outrun platinum's 30% increase


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