The gold rush is over, says Moonraker Fund Management, with predictions instead that silver will outstrip gold in a rally.

With gold outperforming silver by 46 per cent over the three years to May 31 2010, silver, Moonraker said, is due a catch-up. Moonraker attributes this to long-term correlation between the two metals, and believes that as gold becomes ever more expensive, investors will turn to silver as an alternative.

Gold and silver are not a bubble situation, Moonraker said, and the firm believes deterioration of confidence in Western currencies will continue. Western currencies, they said, will continue to be de-rated versus the currencies of countries such as China and Brazil, which are non-indebted.

Jeremy Charlesworth, manager of the Moonraker Commodities Fund, said: "If you mass produce something then it will lose value at some stage,. Quantitative easing is undermining the value of Western currencies and assets yet the European Union has decide that the solution to the debt crisis is even more debt and confidence in the recovery package has now evaporated.

"When people abandon bonds and Western currencies they will look for real assets, which can't be created at the touch of a button. Investors will continue to invest in such assets, including property, equities and commodities such as gold and silver."

Charlesworth said silver, which currently trades at around $18-$19 per ounce, also benefits from industrial use. "Silver has lots of practical applications and is widely used for example in plasma screens, mobile phones and for coins."

Platinum is also tipped, although Charlesworth did not write gold off completely. He said it could reach as high a trading rate as $5,000 per ounce.

"The gold market really does have the bit between its teeth at the moment but a pullback in prices would only be a buying opportunity. It won't be until gold is going up $150 a day that the bubble will burst. It might only reach $5,000 or more for one day but at that point there will be a real crisis of confidence in Western currencies caused by colossal debt and governments will be forced to bring their deficits under control."

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