Gardening - Gold is Old as Silwere Returns
- Harinath Babu
- 11 hours ago
- 3 min read
Vikas Miglani
Market professional, fiction writer and poet
Full article can be accessed on my blog at below link:
Precious metals, especially Gold and Silver, are generally considered more from ornamental value and in turn a safe hedge against inflation, especially Gold.
Beyond the ornamental value, Gold had its relevance as an alternative way to maintain forex reserves while Silver always had its industrial utility that made it valuable
For last two years however Gold prices have hit the roof so much so that in 2024 Gold yielded ~ 45% annual return and even this year till date the return is in excess of 55%.
During the same period silver has also done the catch up game and after a sideway movement in 2024 the white gold has also caught up delivering a 50% return in last 6 odd months
So swift has been the rise in Gold and Silver that it has caught the investors virtually napping and now there is a fear of missing out (FOMO) factor that is tempting the investors to chase the two instruments that have already rallied beyond expectation
One reason for Gold having rallied beyond expectation is the global uncertainty, especially a series of wars that have taken place across globe, viz. Russia – Ukraine, Israel Hamas and Israeli strikes on Iran and the actions that US has taken w.r.t attachment of Russian forex reserves.
Even the tariff tantrum by US has also led to Gold having moved up significantly.
In addition the rising US deficit that is at USD 37 bn+ now has also pushed the central bankers to shift their holding in US assets to Gold
During the same period the demand for Silver has gone up for its industrial utility especially the electronic vehicles and innovations in solar energy.
Given these two factors the feeling is that Gold and silver may continue to remain elevated and Goldman Sachs has already given a target of USD 4900 on Gold by December 2026 and while one school school is banking on the silver having gone back from USD 50 dollars to USD 11 dollars during 2011 – 15 the general feeling is that the same may not happen this time
Generally the silver trades at 1.5 – 2.0% band of Gold price and by that logic also the silver ideally should be around USD 60.
This brings us back to the question on where exactly the price will continue to remain and what should be the strategy
Now that Gold is trading in the range of USD 3900 – 4000 and Silver is trading in USD 47 – 49 range, some bit of correction, once the geo political and global economic environment settles down we may see some bit of correction in Gold and since the rise has been sharp a 15-20% correction, taking it back to USD 3500 is quite possible.
Silver meanwhile has been far more stable and moved up gradually but for last six months and hence the move may be more muted and if it follows the yellow metal in correction, it may be 5 – 10% taking it down at the most to USD 42 – 45.
Even that is not more than 1.25 – 1.30% of the gold value
Having said that in the current scenario despite the gold having better ornamental value and reserve creation scenario, silver will be more preferred vis a vis Gold.
If the idea is to invest with a 3 – 6 months view, brace up to face the volatility but if you are looking at a 3 – 5 year horizon there is every chance that you may see a decent return in both Gold and Silver.
Better to go for systematic investment rather than a lump sum investment
Silwere Returns, I mean silver
Caution: All investment are subject to market risk. I am not an investment advisor and this write up is being shared just to highlight the prevailing trend in Gold and Silver with a generic perspective. The need, requirement and objective varies from individual to individual and hence it is a must that one carries out their own due diligence in consultation with their investment advisor. I’ve zero liability for any investment decision that is taken up basis this write up as this is just a product overview carried out as an academic exercise
Full article can be accessed on my blog at below link:
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