Silver's breakout year: Why poor man's gold is outshining its richer cousin
Long dismissed as gold's cheaper cousin, silver is now taking center stage in global metals markets. Prices have surged to fresh record highs, fuelled by a potent mix of bullish fundamentals, rising industrial demand, and growing strategic interest from institutions and even central banks. A sharp correction in the gold-silver ratio has further bolstered silver's appeal, prompting analysts to suggest this rally may be just getting started.
ADVERTISEMENT Silver futures for July expiry hit a new all-time high of Rs 1,09,748 per kilogram on MCX on Wednesday, breaking Tuesday's record. The rally extended further in September contracts, which touched Rs 1,11,000 per kilogram. This marks a nearly 25% rise from silver's all-time low of Rs 88,050 per kg, underscoring the metal's spectacular reversal in fortunes.
Globally, silver prices were steady around $36.72 per ounce on Thursday, holding close to the 13-year high of $37.40 per ounce reached earlier in the week. Though domestic prices cooled slightly on June 19 to Rs 1,08,300/kg, analysts attribute the dip to minor profit-booking by traders, not a weakening of trend.
In sharp contrast, gold prices have softened over the last two sessions. Gold futures for August delivery slipped to Rs 99,329 per 10 grams on Wednesday, down 0.2%, even after breaching Rs 1 lakh per 10 grams for the first time earlier this month. The divergence has narrowed the gold-silver ratio, once above 100 in April and May, to about 91 now, further strengthening silver's case.
At the heart of silver's breakout rally is a potent combination of rising industrial demand, structural supply deficits, and a macroeconomic backdrop that's favouring safe-haven assets.
ADVERTISEMENT 'COMEX silver surged to a 13-year high of $37.40 per ounce, while MCX silver prices rallied to a record high of Rs 109,748/kg on Wednesday, driven by strong safe-haven demand amid escalating geopolitical tensions,' said Kaynat Chainwala, AVP-Commodity Research at Kotak Securities.Chainwala noted that silver's dual identity, as both an industrial commodity and a precious metal, makes it uniquely positioned. 'This allows it to benefit from heightened risk aversion as well as from long-term trends in renewable energy and technological advancement,' she said.
ADVERTISEMENT According to Chainwala, silver's critical applications in solar energy, electronics, EVs, and 5G technology have driven demand to record levels. In 2024, industrial demand hit a new peak of 680.5 million ounces, while global mine supply has struggled to keep pace after peaking in 2016. Despite a modest 2% supply uptick and a projected 1% dip in total demand in 2025, the market is bracing for a steep deficit of 117.6 million ounces.The sharp correction in the gold-silver ratio has also triggered aggressive positioning in silver. Historically, a high ratio indicates that silver is undervalued relative to gold, and reversion often leads to silver outperforming.
ADVERTISEMENT 'The gold-silver ratio has rarely been this high historically and we are now seeing it start to correct. I believe it has a long way to go,' said Brad Smoling, Managing Director at Smoling Stockbroking. With gold currently at $3,411 an ounce and silver at $36, the ratio stands around 93. To return to the long-term average of 70, silver would need to climb to $48 per ounce, assuming gold prices remain unchanged.
Smoling also pointed to long-standing structural issues in the silver market. 'The silver price has been suppressed by a concentrated short position held by a handful of bullion banks on the Comex exchange. This has been the case for decades,' he said.
ADVERTISEMENT 'But we are now at the point where the physical shortfall in silver supply for the past five years is no longer controlled by the futures market. It is such a small market,' Smoling said.Silver's affordability compared to gold, especially at a time when gold trades above Rs 99,000 per 10 grams, is making it increasingly attractive to newer generations of investors. Analysts say millennials and Gen Z are driving a shift toward silver as both a tactical bet and a long-term play.'Silver remains more affordable than gold, while also offering broader exposure to the booming green and tech-driven industrial sectors,' Chainwala said. Institutional interest is rising too, with ETF holdings up 2.2 million ounces in a single day last week.In a landmark development, Russia's plans to purchase $535 million worth of silver over the next three years marks the first known central bank entry into the silver market in recent history, signalling the metal's growing strategic importance.'The biggest long-term issue now being realised is that so much silver has been consumed or destroyed, unlike gold, we will be struggling to meet global demands from this point on,' Smoling added.While silver eased slightly on Thursday, analysts say this is a natural breather. 'Taking partial profits at elevated levels is advisable to lock in gains while maintaining exposure to further upside,' said Chainwala. 'Long-term investors should view pullbacks as buying opportunities.'Chainwala forecasts silver could climb toward $40 per ounce this year, with a possible extension to $50 by the end of 2026. On the domestic front, MCX silver could test Rs 1,25,000 per kilogram, with support levels around Rs 1,01,300/kg over the next six months.Smoling, meanwhile, urged investors to be selective in their exposure. 'I advise my clients to consider some physical metal and good quality silver mining shares. I would avoid a lot of the ETFs and other paper silver investments.'With geopolitical tensions brewing, particularly in the Middle East, and the U.S. Federal Reserve maintaining a cautious stance on inflation and interest rates, silver is enjoying a rare alignment of factors that support both short-term rallies and long-term revaluation.Once a sidelined asset, silver is now being re-rated, not just as an industrial input or inflation hedge, but as a strategic investment that combines affordability, scarcity, and essential utility. And with both investors and institutions waking up to its promise, the silver story may just be entering its most consequential chapter yet.
Also read | Explained: Why gold beat Euro to become the world's second-largest reserve asset
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
(You can now subscribe to our ETMarkets WhatsApp channel)
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
43 minutes ago
- Time of India
Panbazar road overbridge to be ready by July: NFR
Guwahati: Construction of the Panbazar road overbridge (ROB), which began last year, is expected to be completed by July, Northeast Frontier Railway (NFR) officials said. The bridge is likely to ease traffic congestion in the Paltan Bazar and Panbazar areas, two of the city's oldest cosmopolitan areas. Tired of too many ads? go ad free now "As of now, concretisation work on the bridge's approaches is going on. But most of the work has been completed, including laying the foundational structures, significant fabrications, and placing the bow string girders. Advanced sub-soil strengthening through geo-cell technology has also been completed. The project is expected to be complete by July this year," said Kapinjal Kishore Sharma, chief public relations officer, NFR. The construction work of the ROB has not been progressing on a smooth note. The CPRO said the presence of the fire brigade station posed a challenge in the stacking of construction materials, limiting workspace efficiency. Approximately Rs 48 crore in cost, the project was undertaken by a Kolkata-based construction company to facilitate the smooth movement of the electric locomotives as part of the NFR's ongoing electrification process, where high-voltage lines have been installed. However, the old ROB, which was built in 1965, had turned into a 'dead wire zone'. The area under the bridge was a neutral point, and since it was not charged, it restricted the speed permanently to 15 km/h. As a result, locomotives approaching Guwahati railway station failed to maintain the required momentum, causing them to halt in that area. "Waterlogging also used to be a recurring challenge, especially during heavy rains, causing signal failures and disruptions. Tired of too many ads? go ad free now With the necessary adjustments to this project, the lifted track levels will prevent waterlogging, ensuring smooth operations even during monsoons," Sharma said. He added that the new ROB will aim to address the limitations of its predecessor while introducing significant enhancements. With a span of 60 meters, it will provide improved vertical and horizontal clearance. It will also feature a three-lane wide road replacing its two-lane limitations, which will increase its capacity to handle higher volumes of road traffic as well, thus ensuring a smoother transportation system for commuters.
Time of India
43 minutes ago
- Time of India
ICICI sought to acquire HDFC, reveals chairman Deepak Parekh
Former HDFC chairman Deepak Parekh and ICICI Bank chief Chanda Kochhar MUMBAI: Former HDFC chairman Deepak Parekh, in a candid disclosure, said that then ICICI Bank chief Chanda Kochhar had proposed a merger between the two lenders - well before HDFC's eventual reverse merger with its banking subsidiary. During an interaction with Kochhar on her channel, Parekh said: "I remember you talking to me once. I remember it very clearly. It's never been talked about in public, but I'm willing to share it now. You said that ICICI started HDFC. 'Why don't you come back home?' That was your offer." Parekh said he declined the offer, saying "it won't be fair" or "proper with our name and the bank and all". Parekh said the eventual merger with HDFC Bank, completed in July 2023, was driven mainly by regulatory pressure. RBI had classified NBFCs like HDFC, then holding assets over Rs 5 lakh crore, as systemically important, breaching the Rs 50,000-crore threshold. "RBI supported us and they pushed us into it to some extent and they helped us," he said. However, he added that there were "no concessions, no relief, no time, nothing". Describing the day the merger concluded, Parekh called it "a sad day and a happy day". He said, "It's good for the institution. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 180k traders turn to IC Markets for optimum CFD trading conditions IC Markets Sign Up Undo It's good for the country to have large banks. Look at how large Chinese banks are. We have to be bigger, larger in India." Parekh believes that Indian banks must grow through acquisitions to become stronger in future. On broader economic concerns, Parekh cited persistent uncertainty in supply chains, trade policy, and export conditions as top CEO concerns. Calling insurance the "least understood product", Parekh criticised "mis-selling by banks" driven by high upfront commissions. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Time of India
43 minutes ago
- Time of India
Online scammers dupe Panchkula resident of Rs 18L in stock trading fraud
1 2 3 Panchkula: The cybercrime police have registered a case against unknown individuals for allegedly duping a resident of Rs 18 lakh under the guise of offering high returns through online stock trading. No arrests have been made so far. Jagmendra Singh, 56, a resident of Sector 12A, filed a complaint stating that he was defrauded after responding to a Facebook advertisement promoting online trading. Upon engaging with the ad, he was introduced to a scheme called block trading, which promised daily profits of 10–20%. After sharing his contact details, Singh received a WhatsApp message from a woman named Aarti Bhalla, who claimed to be an assistant to Shripal Shah from Kotak Securities. She shared a profit plan for 2025, including stock details and company credentials such as Sebi registration and CIN numbers. Singh was then sent a form link and added to a WhatsApp group with around 150 members. Between May 10 and May 16, he observed daily stock recommendations and selling guidance within the group. Aarti Bhalla later guided him to install the Kotak QIB application, and a block trading specialist persuaded him to invest. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 40세 미만이라면 이 매혹적인 게임을 하지 마세요 경복의 바다 게임 플레이 Undo On May 16, Singh invested Rs 50,000 in Vivanta Industries shares, transferring the amount to an account claimed to be Sebi-certified. The app displayed his balance, encouraging more investments. He then invested Rs 1 lakh more on May 18 and sold shares on May 19, noting a profit balance of Rs 58,727.25 on the app. Encouraged by the apparent gains, Singh made additional transfers of Rs 60,000, Rs 1,99,000, Rs 1,00,000, Rs 2,00,000, and Rs 70,000 to various accounts. On June 4, he invested Rs 11 lakh in the IPO of Scoda Tube Ltd, bringing his total investment to Rs 18,79,000. The app showed a balance of Rs 1,10,80,241. However, when Singh attempted to withdraw Rs 1,20,000 on June 10, for his son's wedding, the transaction failed. He was informed that his funds were locked in an IPO and that he needed to deposit an additional Rs 8,02,414 to unlock them. Realising he had been scammed, Singh filed a complaint with the cyber police. After verifying the facts, the police registered a case against unknown persons and are scrutinising the accounts to which the money was transferred.
