gold to shield their portfolios could now consider adding silver. A popular ratio that determines the relative values of gold and silver is pointing to an outperformance in silver soon driven by a likely shift in preference to the cheaper precious metal following the recent rally in gold prices and a pick-up in industrial demand, said money managers and analysts.
Both gold and silver have risen about 11% so far in 2023, but the rally in silver prices could sustain for longer from here on, given the robust demand for metal which finds wide industrial usage as well.
Prices of silver are seen rising to as much as ₹85,000-90,000 per kilogram over the next 9-12 months, which implies as much as 20% upside from the current levels.
ET BureauAnalysts said the gold-silver ratio – a measure that compares gold prices to silver, is currently at 80. Historically, this gauge has been in the average range of 65-75, suggesting there is room for rally in silver.
“Silver is likely to outperform if you see the gold-silver ratio,” said Ravindra Rao, head of commodity research at Kotak Securities. Silver prices have given a breakout and moved past its initial resistance level of ₹72,000, and could now head for about ₹85,000-86,000 on the MCX, he said.
India is the world’s largest consumer of silver, and imports as much as 90% of its requirement (about 9,500 tonnes in 2022). Industry officials said with supplies dwindling, prices may remain firm.
“For silver, world over, stocks are at one of the lowest levels in last 4-5 years, so there is a huge demand across the globe. Prices for silver will continue to be high,” said Arun Misra, the chief executive officer of Hindustan Zinc, India’s largest and the world’s fifth largest producer of silver.”The demand for silver is coming from usage in the 5G technology, different areas in the electric vehicles and renewable energy – all these indicating that industrial demand will be very robust.,” said Navneet Damani, senior vice-president for commodity research at Motilal Oswal Securities. “We see a lot of pent-up demand coming in the near future.”