Why silver has lagged behind gold despite both enjoying haven status
Mon April 21 2025
Though silver will be in deficit for the fifth year in a row in 2025, gold has performed better among the precious metals, mainly due to macro and geopolitical drivers. According to the World Silver Survey 2025, issued by New York-based The Silver Institute over the weekend, silver’s performance has been less flattering compared with gold.
“Having been left behind during the end-2024 rally, we had expected that silver would start catching up with gold sooner or later. These expectations have so far not materialised,” said the institute, a non-profit international association that draws its membership from across the breadth of the silver industry.
Gold was quoted at $3,326.7 an ounce during the weekend, gaining 26.75 per cent so far in 2025. In comparison, silver, which ruled at $32.51 an ounce, has increased by 12.57 per cent only. Year-on-year, gold has surged by nearly 40 per cent, while silver prices have gone up by 15 per cent.
Macro, political drivers
At the time the survey was written in late March, the gold:silver ratio was trading just over the 90:1 mark, which is close to the year-to-date average for this measure and around 6 per cent higher than the 2024 average of 84.8, it said.
“Silver’s failure to launch is mainly due to the macro and geopolitical drivers of the past couple of years being primarily supportive of gold’s more widely accepted quasi-monetary properties,” the survey said.
Stating that silver bulls remain disappointed with its performance, the institute said it reflected how the precious metal has fluctuated relative to gold. Traditionally, silver performs better than gold, whose market is less liquid and reflects its higher price volatility.
Other factors
“In rallying markets, therefore, there is an expectation that silver will tend to outperform gold. In addition, silver’s exceptionally strong supply-demand conditions over the past few years should be all the more reason for the metal to outperform gold,” the survey said.
However, some of the key market participants of the past two years, for example, macro/generalist funds and sovereigns, were comfortable with the gold market’s depth and tradition as a diversifier, but less so with silver’s smaller size and industrial attributes. “Its strong supply-demand conditions also have had as yet a limited impact on its price, due to still plentiful above-ground stocks of silver,” the survey said.
Other factors that reined in silver is its use as an industrial metal and above-ground stocks, it said. Healthy central banks buying also gave gold more glitter, though silver, too, gained.
Conditions positive
The survey said that for the near future, it believes conditions will remain positive for silver. “We believe there is further upside for silver prices. We are confident that in the next few months we will see new cycle peaks, exceeding the 2024 high to levels not seen for many years,” it said.
At some point, it expects silver to catch up with gold, thanks to investors looking for value given its recent underperformance. “This may not be a story for 2025, however, given still adequate silver stocks and the current haven bid on gold, which has pushed its price into uncharted territory,” the survey said.
However, silver’s rise could be curbed by a lower deficit of 3,659 tonnes this year compared with 4,632 in 2024. Towards year-end, if there are no further US policy shocks, the US escapes stagflation and the end to Fed cuts is clear, precious metals will likely see a softer tone, the institute said.
“While ongoing uncertainties elsewhere, along with silver’s healthy supply-demand conditions will offer support, we do see prices easing back in late 2025,” it said.
Source: https://www.thehindubusinessline.com/