In a January 21 commodities note, Motilal Oswal said silver has delivered an exceptional rally of over 200% in the past 12 months, sharply outperforming gold’s roughly 80% rise.
The brokerage said the outperformance has compressed the gold–silver ratio to around 50 at the start of 2026 from pandemic highs near 127 — a move that signals a large part of silver’s catch-up trade has already played out.
Motilal Oswal said the shift is now showing up in investor flows. It noted that global silver ETFs have seen outflows of more than 3 million ounces since the start of 2026, even as silver prices remain elevated. In contrast, the brokerage said global gold ETFs have continued to see steadier inflows, reflecting a gradual rotation away from higher-beta exposure toward safer havens.
The brokerage linked the change in investor preference to rising macro and geopolitical uncertainty. It highlighted tensions involving the US, Iran and Venezuela, risks in the Middle East, the delayed impact of tariffs, and concerns around a potential US government shutdown as factors contributing to market unease.
Motilal Oswal also pointed to expanding global liquidity as a key driver supporting precious metals. It noted that US M2 money supply stands near $22 trillion and China’s M2 has crossed about ¥340 trillion, growing at over 8% year-on-year. The brokerage said rising money supply adds excess liquidity into markets, increasing volatility and strengthening demand for inflation hedges.
While it maintained a positive view on silver’s longer-term structural outlook — supported by industrial demand and supply constraints — Motilal Oswal said the near-term setup looks more imbalanced after the rally. It noted that silver volatility has expanded with wider daily swings, while gold continues to trade in a more stable trend, improving its appeal for risk-managed positioning.
Motilal Oswal also flagged tightness in physical silver markets but warned that premiums may reflect stretched pricing. It said Shanghai silver trades $10–11 per ounce above COMEX, while MCX silver remains at over a 10% premium, pointing to inventory stress but also elevated near-term pricing.
On relative valuation, the brokerage said the gold–silver ratio typically averages near 70 over the long term and is currently near 50 — a level it considers difficult to sustain. The brokerage said a move back toward 65–70 would imply relative outperformance of gold, supporting a tilt toward gold as a volatility-managed allocation strategy rather than a negative view on silver.
It also noted that silver’s rise from around ₹60,000 to ₹3.2 lakh increases the probability of portfolio rebalancing by larger investors at current levels. Motilal Oswal said it is not changing its stance on precious metals, but it expects near-term allocations to skew more toward gold while silver remains a long-term core holding.