Silver to shine brighter than the yellow metal

Investors who have accumulated gold in their portfolios over the past two or three years as a hedge against market instability may want to consider diversifying some of their holdings into silver. According to a report, experts suggest that silver has the potential to outperform gold in the near future, primarily due to its recent underperformance relative to gold.

Over the past two or three years, investors have increasingly turned to gold as a safe haven asset. During times of economic uncertainty or market volatility, gold tends to retain its value or even appreciate, making it a popular choice for investors seeking stability and protection against risk.

Despite the overall rally in both gold and silver prices, silver has lagged behind gold. However, given the current market dynamics and the outlook for industrial metals, it is anticipated that silver could catch up and even surpass gold in terms of returns. Unlike gold, silver has significant industrial applications. It is used in various industries, including electronics, solar panels, and healthcare. Therefore, the increasing demand for industrial metals globally could further support the price of silver.

It is predicted that silver could appreciate by 15-20% from its current levels. They suggest that it could potentially cross the ₹100,000 per kilogram mark within a one-year time frame. As of now, silver is priced at ₹84,984 per kg on the Multi Commodity Exchange (MCX).

The gold-to-silver ratio, which compares the value of gold to that of silver, is currently over 85. Historically, this ratio typically falls within the range of 65 to 75. Traditionally, the value of 10 grams of gold is approximately 65-75% of the value of a kilogram of silver. However, with the current ratio showing gold at 85% of the value of silver, it suggests that silver is relatively undervalued compared to gold. Analysts interpret this as a signal that silver is likely to experience significant gains in the future. In other words, given the historical relationship between gold and silver prices, the current high ratio indicates that silver has room to increase in value compared to gold.

The current period in India is marked by increased volatility as the country has on going general elections, there’s anticipation of interest rate reductions by the US Federal Reserve. These factors are expected to bolster the prices of both gold and silver. However, silver holds an additional advantage due to its extensive industrial applications. As silver finds application in the manufacturing of semiconductors, which are integral to modern electronics.

Considering the widespread use of silver across multiple industries such as renewable energy, electronics, and automotive, its demand is expected to remain robust. This diversification in its usage further supports the potential for silver prices to rise, particularly amidst uncertain economic conditions and geopolitical events.