By Silver has been the standout performer in the precious metals market this year, boasting an impressive 18% year-to-date gain and currently trading at ₹86,000 per kilogram.
Gold has risen by 16%, hovering near ₹73,000 per 10 grams. A mix of geopolitical uncertainties, persistent inflation, and hopes of interest rate cuts by the U.S. Federal Reserve drives this bullish trend.
Precious metals like gold and silver traditionally move in tandem, thriving in times of economic uncertainty, geopolitical tensions, and high inflation. Anyway, silver’s performance has slightly outpaced gold’s, making it a compelling choice for investors looking for both stability and growth.
A factor behind silver’s rise is its dual role as both a precious and industrial metal. About 50% of globally produced silver is used in various industries, including solar panels and electric vehicles.
Vandana Bharti, head of commodity research at SMC Global Securities, highlights the booming solar power industry as a key driver of silver demand.
Global demand for silver is expected to reach 1.2 billion ounces in 2024, potentially marking the second-highest level ever recorded.
According to the International Energy Agency, global investment in solar PV manufacturing more than doubled last year to around $80 billion, accounting for approximately 40% of global investment in clean technology manufacturing.
This surge is largely driven by China, which has more than doubled its investment in solar PV manufacturing between 2022 and 2023. Silver demand from solar PV panel manufacturers, especially in China, is projected to increase by nearly 170% by 2030.
Another driving force is the affordability and accessibility of silver compared to gold, often referred to as “poor man’s gold.” This makes silver a popular choice for lower-income groups, particularly in the form of ornaments. According to the Silver Institute, global demand for silver jewelry is forecasted to grow by 6%, led by India.
Neelmani Sen, a senior research analyst at Swastika Investmart, emphasizes China’s growing role in the global silver market. As a major player in electronics, solar energy, and manufacturing, China’s industrial growth will likely continue to bolster silver demand in the long term.
Despite its volatility, the outlook for silver remains promising. Bharti believes that silver will likely outperform gold in the coming years due to its increasing industrial demand. If the Federal Reserve cuts interest rates in 2024, it would further boost silver prices by stimulating economic activity and increasing demand for industrial metals.
Investment in silver should align with investors’ risk appetite. Historically, silver prices are positively correlated with gold but exhibit higher volatility. “As a hybrid metal with both precious and industrial applications, silver tends to experience more significant price swings compared to gold,” Bharti explained. Investors can consider silver ETFs or maintain physical positions.
Kaynat Chainwala, senior manager of commodity research at Kotak Securities, points out that silver remains relatively cheaper despite its strong performance. The gold-silver ratio is currently at 80.3, compared to a 20-year average of 68.3.
Silver’s broader applications in the clean energy sector and potential benefits from a soft landing in the U.S. economy add to its appeal. Experts are optimistic about silver’s prospects, with some predicting it could hit ₹92,000 in the next three months.
Silver seems set for further gains towards ₹92,000 in the next three months, with ₹78,000 as a critical support level.
Kaynat Chainwala
