Silver prices, which have outshone gold this year, could continue to outperform the yellow metal in the near to medium-term, say analysts.
Gold rally has gained over 52 per cent year-to-date, rising from $2,659 per ounce at the end of last year to $4,017.18 on October 11.
Silver rose from $28.78 per ounce last year to $50 over the weekend, registering a massive increase of over 73 per cent year-to-date.
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According to George Pavel, general manager for the Middle East at Naga.com, the outlook for silver in the near to mid-term could remain bullish due to the market’s fundamentals.
“The market is facing a persistent structural supply deficit for multiple years, with demand expected to outstrip supply. Demand is driven by both industrial use in green energy and technology and renewed safe-haven investment interest,” he said.
Michael Brown, senior research strategist at Pepperstone, said the outlook for silver remains positive, with demand for precious metals still very solid across the complex, even if the initial move above $50 per ounce inspired a bout of profit-taking.
Will silver continue to outshine gold?
He noted that physical demand for silver is clearly still intense.
“Furthermore, using ETF (exchange traded fund) holdings as a proxy, demand is still some way off the highs seen at the back end of 2021, suggesting further room to run to the upside. In terms of outperformance, silver’s rally has vastly outpaced that of gold this year, and could well continue to do so over the medium-term, especially given silver’s typical status and behaviour as a higher-beta counterpart to bullion,” he added.
Vijay Valecha, chief investment officer at Century Financial, said the silver rally is likely to continue in the near to mid-term, provided it achieves a confirmed breakout above $50 an ounce.
With macro tailwinds reviving interest in hard assets and inflation hedges, plus silver’s unique dual role as both a monetary and industrial metal, Valecha believes that the setup points to a multi-year secular bull cycle for silver rather than a fleeting surge.
“Silver will likely outperform gold in the near to mid-term. The steep decline in the gold-to-silver ratio is proof of silver’s growing strength within the precious metals sector, amplified by its outsized industrial demand drivers (e.g., solar photovoltaics, EVs, and 5G) that gold lacks. While gold benefits from safe-haven flows, silver’s leveraged exposure to economic recovery and green tech growth should drive superior returns, especially as real yields fall and monetary easing accelerates,” said the chief investment officer of Century Financial.
Benefit from a missed golden opportunity
Valecha believes that silver presents a compelling opportunity for those UAE investors who missed the recent gold rally.
“After decades of consolidation, silver is at the cusp of its own secular bull cycle, with a technically robust setup (cup-and-handle breakout) and structural tailwinds that could propel it to new highs, well beyond gold’s recent performance,” he said, adding: “We recommend prioritising silver over gold for new allocations in the near to mid-term. While gold remains a reliable macro-hedge against uncertainty, silver is more of a high-beta play. The main factors driving it are industrial demand surge, and outperformance signals (e.g., falling gold-to-silver ratio) offer higher upside in this environment.”
He suggested that investors consider a breakout above $50 per ounce as the entry trigger, with a long-term target of $75-$80 an ounce, but always balance with risk management given silver’s volatility.
