Silver set to outperform gold? Precious metal likely to cross Rs 1 lakh mark over 1 year horizon

Investors who have relied on gold as a safe haven asset in their portfolios in recent years might contemplate diversifying a portion of their holdings into silver, as it shows potential to outshine gold this year. According to experts, silver has lagged behind gold in the recent rally of precious metals, but with the possibility of further increases in industrial metals worldwide, silver could see a surge of 15-20% from its current levels.This could potentially push its value beyond Rs 100,000 per kilogram within the next year. As of now, silver is trading at Rs 84,984 per kg on the MCX.
"We have a very strong bet that China will recover in the third quarter of 2024," Navneet Damani, group senior vice-president at Motilal Oswal Securities told ET's Nikita Periwal. "In the last three to five years, silver has moved more like an industrial metal than a precious metal, and once there is recovery in China, silver can also take off," he said.
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Damani recommends buying silver on dips of up to Rs 80,000 per kg, anticipating a 15-20% upside in silver prices, compared to the 3-5% expected in gold.
Although both gold and silver reached their all-time highs in the domestic market earlier in 2024, the gold-to-silver ratio, a key indicator, suggests that silver prices have not increased as much as gold. The current ratio is slightly above 85, significantly higher than its historical range of 65-75, indicating that silver is likely to experience higher gains in the future, according to analysts.
While heightened volatility in India ahead of general elections and the anticipated easing of interest rates by the US Federal Reserve are expected to support the prices of both gold and silver, silver will have the added benefit of its various industrial applications, including usage in solar panels, electric vehicles, semiconductors, other renewable energy sources, and certain electronic and consumer durables.
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"Over the medium-to-long term, we are extremely bullish on silver, and we see silver outperforming in the long run because industrial demand will pick up, including from solar panel manufacturers and other green technologies," Tapan Patel, fund manager at Tata Asset Management told the financial daily.
Patel recommends that investors maintain a combination of both gold and silver in their portfolio, given the current market environment. "If investors are looking at a 10-15% exposure to bullion, then 60-70% should be gold," he said.
Shashank Pal, the chief business officer at PL Wealth Management, believes that silver is bound to rise, potentially more than gold over a year, due to its lack of appreciation in recent years compared to gold and its increased industrial applications.