Gold vs Silver: Which Metal Should Investors Buy Now?

Gold and silver have delivered strong returns over the past five years, but the current gold-silver ratio suggests investors may need to look beyond recent gains before choosing between the two.

Gold has risen from around ₹41,700 per 10 grams in 2021 to nearly ₹1.62 lakh, gaining about 289%. Silver has performed even better, climbing from around ₹55,200 per kg to ₹2.60 lakh, a gain of roughly 371%.

Gold-Silver Ratio Near 67

The gold-silver ratio, which shows how many ounces of silver are equivalent in value to one ounce of gold, currently stands at around 67.

Historically, the ratio has ranged between roughly 50 and 90, with a long-term average of around 70. A higher ratio can indicate that silver is relatively cheaper than gold, while a lower ratio can suggest that silver is relatively expensive.

At around 67, the ratio is relatively balanced and does not provide a strong signal favouring either metal.

Demand Could Drive the Next Move

Silver could benefit from growing industrial demand from renewable energy, electronics and manufacturing. Meanwhile, gold could continue to find support from investment demand and India`s festive-season buying.

Colin Shah, Managing Director of Kama Jewellery, expects gold to remain on an upward trend despite possible short-term corrections.

Global factors, including US interest rates, dollar movements and geopolitical developments such as the Iran war and Russia-Ukraine war, could also influence precious-metal prices.

Should Investors Buy Both?

Rather than choosing one metal exclusively, investors could consider holding both in a suitable proportion. A 70:30 or 80:20 allocation tilted towards gold is one possible approach, depending on individual risk appetite.

Gold generally offers greater stability, while silver can deliver higher upside but also comes with greater volatility.

For long-term investors, gold and silver should form only a part of a diversified portfolio alongside stocks, mutual funds, fixed deposits and other assets. A three-to-five-year investment horizon may be more appropriate than focusing on daily price movements.

With the gold-silver ratio near 67, the key question may be less about choosing gold or silver and more about finding the right balance between the two.