Kolkata: Silver is a metal that is used both as a safe-haven asset and for a diverse and growing number of applications like renewable energy and IT. Still it has lagged behind the bull run in gold prices. Chintan Haria, principal – investment strategy, ICICI Prudential Mutual Fund tells News9live.com about the outlook of the metal and the possible allocation that one can follow.
Q: Silver has lagged behind gold despite strong fundamentals. It appears that silver is bracing for a catch-up rally. Do you agree?
A: The risk of adverse impact of US tariffs on global growth has been weighing on silver prices off late as silver’s industrial demand could take a hit. These concerns seem to have eased now with a 90-day tariff freeze and improving prospects of a US-China trade deal. This will be positive for global growth and in turn should be favourable for silver prices going forward.
Q: Gold hit $3,500, silver still under $35. Gold-to-silver ratio is nearing 100. Does it make a strong case for silver?
A: Gold prices went up aggressively in response to higher US tariffs and macroeconomic uncertainty, and are now giving up some of those gains. Historically, when the ratio crosses 80, we have seen it revert to those levels with silver outperforming gold in the subsequent period. Based on this expected reversion to mean, outlook for silver looks constructive.
Q: Is there a deficit in silver supply? Can you share data to explain how big is this deficit?
A: As per the Silver Institute’s World Silver Survey 2025, silver supply was around the 1015 million ounces mark in 2024, while demand was higher at 1164 million ounces resulting in a deficit of around 149 million ounces. This deficit is expected to stay elevated given the steady growth in industrial demand for silver. A sustained deficit will act as a strong floor for silver prices.
Q: How has silver performed in precious metal bull runs?
A: Silver outperformed gold in bull runs of 2009-2011 and 2020, but the higher returns were accompanied with higher volatility.
Q: Can we say that despite strong demand fundamentals silver has not performed in line with gold?
A: Silver is a multi-faceted asset class with diverse price drivers. It’s historical function as a precious metal is now balanced out by its increasing role and relevance in the industrial sector thanks to its applications in fast-growing industries such as solar energy, semiconductors and electric vehicles. In fact, industrial use makes up the bulk of silver demand now which means economic growth affects silver more than gold. In the recent past, prospects of higher US tariffs have hurt risk sentiment and cast a shadow on global growth. This has been a headwind for silver prices. Gold on the other hand, has benefited from the resulting risk aversion. Higher geopolitical risk as well as prospect of higher inflation and lower global interest rates have supported gold.
Q: What should be the ideal allocation to silver?
A: Silver plays the dual role of a growth asset in times of economic expansion and a safe haven in times of uncertainty. This makes it like an all-weather asset, making a 10-15% allocation a smart move to improve portfolio’s risk-adjusted returns. In addition, the white metal is a good hedge against inflation given that it has intrinsic value unlike fiat currencies and has been an effective store of value over the years.
(Disclaimer: This article is only meant to provide information. News9 does not recommend buying or selling shares or subscriptions of any IPO, Mutual Funds, precious metals, commodity, any form of alternative investment instruments and crypto assets.)
While gold benefitted from the global trade uncertainties, it acted as a headwind for silver, says Chintan Haria, principal – investment strategy, ICICI Prudential Mutual Fund. Then he outlines the ideal allocation to silver in a retail investor’s portfolio. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
