Tuesday, 16 Dec, 2025
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Gold and silver have posted striking gains this year. Domestic spot gold is up nearly 70%, while silver has surged 115%
The precious-metals market has entered another energetic phase. Earlier this month, 24-karat gold in India traded near Rs 1,30,490 per 10 grams, while silver crossed the milestone of Rs 2 lakh per kg on December 12. Prices alone, however, miss the more important signal. Silver has been decisively outperforming gold.
That divergence is rare. When it occurs, it usually says less about jewellery demand and more about how investors are reading risk, growth and economic momentum.
Returns tell the story
Both metals have delivered eye-catching gains this year. Domestic spot gold prices are up almost 70 per cent so far, while silver has surged an even sharper 115 per cent. On the MCX, silver March futures touched a record Rs 1,93,452 per kg on December 11, jumping 2.5 per cent in a single session. Gold February futures rose more modestly, edging above Rs 1,30,700 per 10 grams.
The contrast reflects not just speculative enthusiasm but different drivers of demand.
Why silver is winning
Silver’s outperformance rests on three pillars.
First, expectations of US interest-rate cuts have lifted all precious metals. Lower rates reduce the appeal of interest-bearing assets, pushing investors towards gold and silver as stores of value.
Second, silver’s industrial role has become a decisive advantage. Demand from electronics, medical equipment and, crucially, solar-panel manufacturing has risen sharply. With global clean-energy investment accelerating, silver is benefiting from a powerful industrial cycle. When investment demand and industrial demand rise together, silver prices tend to move quickly—exactly what 2025 has delivered.
Third, domestic factors have amplified gains. A weaker rupee has inflated local bullion prices, while the wedding season has provided its usual support. For silver, which remains far cheaper per unit than gold, the effect has been stronger. In Delhi, silver rose from around Rs 1,85,000 per kg at the end of November to Rs 1,88,100 earlier this month, a gain of more than 1.6 per cent in just a few days. Gold’s rise over the same period was far more restrained.
Reading the ratio
The gold–silver ratio in India now stands at about 68, meaning it takes 68 grams of silver to buy one gram of gold. Investors track this ratio to assess whether silver looks expensive or cheap relative to gold and to anticipate possible reversals.
Historically, falling ratios have coincided with periods of economic optimism and strong industrial activity, while rising ratios reflect fear and flight to safety. Today’s level suggests markets are leaning towards growth rather than crisis.
Two metals, two roles
Gold remains the steadier asset. It rises slowly, falls gradually and tends to protect wealth during shocks. Silver, by contrast, is volatile. It races ahead when confidence builds and retreats quickly when sentiment turns.
Over the past year, price charts capture this distinction clearly. Gold has climbed in a measured fashion. Silver has surged, driven not only by safe-haven flows but by tangible economic demand—something gold rarely reflects.
How metals stack up against other assets
Long-term data explain why gold continues to anchor portfolios. A FundsIndia study shows that over the past 20 years, gold delivered close to 15 per cent annualised returns, outperforming Indian equities at 13.5 per cent and far exceeding real estate and debt. In rupee terms, gold has even beaten US equities, helped by currency depreciation and steady central-bank buying.
Silver is less consistent. But during strong industrial upcycles, it can generate spectacular percentage gains—a pattern repeating this year.
Over the past five years, gold’s case has strengthened further, with a compounded annual growth rate of 23.2 per cent, compared with 16.5 per cent for Indian equities and 19.6 per cent for US equities.
What comes next
Four variables will shape the outlook.
Interest rates matter most. If the Federal Reserve delays cuts or turns more hawkish, both metals could lose momentum, particularly if the dollar strengthens.
Industrial demand is critical for silver. Any slowdown in electronics, solar manufacturing or factory output would hit silver harder than gold.
Supply is another factor. Silver mining has failed to keep pace with demand, quietly supporting prices. Without a rise in output, prices could remain elevated.
Finally, the rupee will continue to influence domestic prices. Currency weakness lifts local bullion prices regardless of global moves, complicating timing decisions for Indian buyers.
What it means for investors
For most Indian households, gold remains the foundation. It protects savings when other assets wobble. Silver is the satellite—volatile, opportunistic and capable of outsized gains, but not a substitute for gold.
Equities still offer the strongest long-term wealth creation, albeit with higher volatility. Real estate remains steady but slow. Deposits provide safety but modest returns.
Gold is the shield. Silver is the sprinter. Each has a role — as long as investors remember they are not buying metal alone, but exposure to how risk, growth and confidence are shifting in the global economy.
