Do you ever wonder why, despite having high intrinsic value due to its uses in industry, jewelry, and investment, silver is much cheaper than gold? In 2024, silver at Rs 87 per gram is 85 times cheaper than gold at Rs 7,408 per gram. This is not a new anomaly, as this price pattern has been consistent throughout history as gold has traditionally been seen as a safer investment and also used as store of value, making it a safe haven asset.
However, things might not remain the same for gold, as silver could see an unprecedented spike in price in the future, according to reports that cite trends like booming industrial demand for the precious metal coupled with its supply concerns due to depleting reserves.
Silver price may rise exponentially due to its massive use in modern technologies and the severe imbalance between industrial consumption and mining output, according to a recent report by the Silver Institute.
Let’s understand why silver may be poised to become more valuable than gold in the distant future, if not in the near future:
Rising industrial demand and depleting supplies:
Silver has many unique properties that create a massive demand for this glossy metal. The metal has seen a big rise in demand in recent years due to its use in many new technologies and numerous industrial applications, including electronics, solar panels and water purification.
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According to the report by the Silver Institute, global demand for silver in industrial applications is set to rise by 46% by 2033. If we take a look at the supply scenario, there is a sharp contrast to rising demand because of shrinking silver reserves. If we compare the below-ground stock of gold and silver reserves, there is around 50,000 tonnes of the yellow metal still available to be mined against 5,30,000 tonnes of silver. Data shows that silver reserves are still about 10 times higher than that of gold, but the demand for the white metal for industrial purposes is much higher than the yellow metal. According to reports, silver reserves are depleting fast due to high demand This growing reliance on silver, combined with shrinking supply, is expected to drive its price up significantly in coming years.
Artificially low prices and market manipulation:
Another factor that has long been contributed to the price disparity between gold and silver is market manipulation. A 2024 report by Oxford Economics has revealed that certain American banks have for a long time tried to artificially suppress silver prices by trading more paper silver (like contracts or promises to deliver silver) than physically available. This practice by these banks has hurt silver prices as they managed to create an illusion of higher supply of the metal which never existed in that quantity.
As these manipulative practices come to light, increased scrutiny is likely to follow. With physical reserves becoming scarcer, the true value of silver may emerge, potentially leading to a price surge that could surpass gold.
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Historical and intrinsic value discrepancies:
A historical analysis by the World Gold Council shows that despite gold’s current higher market value, silver’s intrinsic value is higher due to its relative rarity — five times less abundant than gold (World Gold Council, 2023). As historical and intrinsic value factors realign, silver’s price could adjust to reflect its true worth, potentially exceeding gold’s value in the future.
By looking at these factors, it becomes evident that silver’s potential to become more valuable than gold is not just a speculative notion but a possibility driven by real economic and industrial trends.