So should silver trade as an investment metal, like gold, or as an industrial metal like aluminum or nickel? To explore this question, I pulled up a handful of base metal 5-year charts, shown above, and compared them to silver. What I found was quite interesting. You will see that from late 2009 through early 2014, nickel, zinc, aluminum, and silver all exhibited very similar price patterns. A sharp rise in price (of at least 50%) in early 2011 was then followed by a slow grind down for three years all the way back to where the 2011 rally began.
Around February 2014, these metals all experienced a sharp rise in price - denoted by the vertical green lines on the charts. But then something changed. Silver immediately gave back those gains while the other three industrial metals continued to rise. In fact, silver, as of this writing, is now just a few cents away from its 2013 low while nickel, aluminum, and zinc are all consolidating at levels 20% above their respective 2013 lows. It's almost as if the market has now completely discounted the fact that silver, first and foremost, is an industrial metal.
So if you believe that the world economy is indeed booming, then silver appears to be relatively undervalued based solely on its industrial usage. If, however, you believe that the gargantuan sovereign debt loads will threaten to collapse the financial system just like in 2008 (because nothing has been truly fixed), then silver should appear undervalued given its "precious" characteristics as a store of value. Either way you look at it, silver is attractive at these levels.