Silver shines as gold's record run pushes investors to seek better value
Fri Feb 21 2025
Silver could rally sharper also because of its increased industrial demand. Mumbai: As gold extends its record-breaking run, bullion investors are weighing its cheaper investment alternative, silver, with greater interest. This is because a key ratio that compares the prices of gold and silver is signalling that the latter offers better value now. Investors looking to bet on silver could consider its Exchange Traded Funds (ETFs).
The silver-to-gold ratio is currently at its all-time low of 0.01, said Sahil Kapoor, head of products & market strategist at DSP Mutual Fund. Its all-time high is 0.06.
The ratio shows how cheap or expensive silver is compared to gold. On average, it takes between 60 and 70 ounces of silver to equal the value of one ounce of gold. Currently, it would take 90 ounces of silver to buy one ounce of gold.
Analysts said this suggests a higher likelihood of a catch-up in silver prices. "After the recent sharp run-up in the price of gold, there is a higher margin of safety in buying silver in the short term," said Kapoor.
So far in 2025, silver has risen 13.3% compared to gold's 11.77%. But it has been an underperformer in the past three years. Silver returned close to 37% as against gold's 54% in dollar terms in this period. Gold price soared to an all-time high of $2,947.11 per ounce on Wednesday, maintaining its bullish momentum, as its reputation as a safe haven instrument has gained further traction on concerns that US President Donald Trump's tariff policies would fuel inflation.
Though the precious metal could strengthen further, the pace of the upmove could be slower, said analysts. "US Fed delaying rate cuts, peace talks between Russia and Ukraine, and slow implementation of the trade tariffs are headwinds for the yellow metal. The premises of uncertainty with which gold is presently rallying would vanish," said NS Ramaswamy, head - commodity desk & CRM, Ventura Securities.
Ramaswamy expects gold prices to reach $3,200 per ounce, or ₹95,000 per 10 grams, during the calendar year. This implies a return of 9-10% in rupee terms. Silver could rally sharper also because of its increased industrial demand.
"There is more room for incremental gains in silver in the near term, and investors could accumulate on any fall," says Manav Modi, bullion analyst, Motilal Oswal Financial Services. Modi has a price target of ₹1.1 lakh to ₹1.25 lakh on silver over the next year, which translates into an average return of 20% on the metal. Though returns from silver could be higher, analysts caution retail investors about the volatility. Ramaswamy points out that silver is 2.5 times more volatile than gold.
Source: https://economictimes.indiatimes.com/