Investors who have accumulated gold in their portfolios as a safe haven asset over the past few years may now consider replacing a portion of it with
silver
, given its potential to outperform gold this year.
Experts believe that silver’s relative underperformance compared to gold in the recent rally of both precious metals, along with the prospects of further gains in industrial metals globally, could help silver appreciate by 15-20% from current levels, potentially surpassing the Rs 100,000 per kilogram mark within a one-year horizon.
Currently, 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. “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.
Also Read | When will gold prices hit the Rs 2 lakh mark?
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.
Also Read | What is 24 karat gold? Know difference between 999 vs 995 fineness gold
“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,” said Tapan Patel, fund manager at Tata Asset Management.
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.
