By Kim Tae-gyu
Staff Reporter

Many have snapped up gold, a time-honored medium of exchange, since last year as the credibility of paper notes fell amid the unprecedented financial turmoil.

However, some market observers predict silver is more promising than gold right now as the former is underrated despite similar functionality.

``The price of gold has shot up over the past year as people have revived the worries lurking deep inside their mind that paper money might become just paper,'' Daewoo Securities researcher Son Jae-hyun said Monday.

``Along the same lines, the price of silver should have followed suit. But it did not happen last year for some reason. But things could be different this year,'' Son said.

In the aftermath of the unexpected collapse of Lehman Brothers last September, the value of gold began its meteoric rise from around $700 an ounce to about $1,000 today.

In comparison, the price of silver fell as low as $8.96 per ounce last November.

Yet, the precious metals have seen a change so far this year _ silver chalked up a 37 percent growth over the past five months to $15.60 an ounce, better than the 12 percent growth of gold, according to Son.

``Ever since its short-term low in November, silver jumped 74 percent in about half a year, outperforming even gold. That is just the beginning and you will see what is in store,'' Son said.

``In my view, silver is better than gold in terms of future prospects for investors. You would be better buying silver rather than gold if you have enough money,'' he said.

Son added that silver, which is also used for industrial purposes such as high-priced electricity conductors, will gain more momentum if the global economy gets back on track.

U.S.-based online financial data provider Marketwatch, formerly known as CBS Marketwatch, recently came up with an identical analysis.

It said silver futures ended May with their biggest monthly gain in 22 years as inflation worries and hopes for an economic recovery boosted the price of the metal.

``Silver has gained 26.6 percent in May, the biggest monthly rise since April 1987. The metal has many industrial uses but is also seen as a hedge against a weaker dollar and inflation,'' the site said.

``In contrast, gold, which has limited industrial uses, has gained 9.8 percent in May, the biggest monthly gain since November,'' it added.

voc200@koreatimes.co.kr