In a world increasingly rattled by global tensions and market volatility, the allure of precious metals has never been more pronounced. For all classes of investors, from seasoned traders to those just starting out, some metals are timeless assets that serve as a hedge against inflation and currency swings.

Gold has taken centre stage, outperforming many other major assets with returns of 27.47% throughout 2024 while US stocks and bonds rose 25% and 6% respectively. While the spotlight might be on gold, silver is quietly carving out its own niche, offering unique opportunities one should not overlook. From January 2023 to December 2024, silver’s returns stand at 20.3%. Increasingly, silver is turning into a compelling asset that can shine in various market conditions.

Is the time right for silver?

In the early days of the Covid-19 pandemic, gold prices surged by approximately 14% from December 2019 to March 2020 as investors flocked to safe-haven assets amidst uncertainty. Silver, on the other hand, dipped 34% in the same period because of concerns around industrial demand for it. Historically, silver has shown a tendency to outperform gold during the latter phases of gold bull markets.

As new information about Covid-19 emerged and economic optimism grew with the announcement of vaccines, investors likely shifted their focus away from gold. Consequently, gold experienced a dip of 19% from August 2020 to April 2021. In contrast, silver gained 58% during the same period, underscoring its potential for outsized gains.

Likewise in 2011, gold reached nearly US$2,000 per ounce as a result of the global financial crisis, while silver peaked just under US$50 an ounce. As of 12 February 2025, with silver trading around US$32—approximately 36% below its all-time high in 2011—there remains significant room for growth while gold appears to be levelling out at approximately US$2,700.

You might ask whether silver is worth the investment – and when is a good time to do so. To answer this, one must consider the Gold-Silver Ratio. It is a metric that measures the relative value of gold to silver, which indicates how many ounces of silver are needed to purchase one ounce of gold.

This ratio helps identify potential overvaluations or undervaluations in the market. A higher ratio often signals a favourable time to invest in silver.

The "80/50" rule is a widely recognised guideline: When the ratio exceeds 80 ounces of silver for each ounce of gold, it may be prudent to pivot towards silver. Conversely, when the ratio dips below 50, gold is perceived to be more favourable.

Let us look at the timing: The current Gold-Silver Ratio and historical performance suggest that silver could be poised for a significant rally, especially as market dynamics shift.

As of 14 February 2025, the Gold-Silver Ratio stands at 89.79, with gold priced at US$2882.53 per ounce and silver at US$32.10. This suggests that silver is currently undervalued relative to gold; for those looking to break into the world of precious metals, it still presents an opportunity to buy in at a relatively affordable entry point. Silver’s potential cannot be overlooked.

Why silver will continue to gain traction

So, will silver maintain this upward trajectory? First, silver is experiencing record-breaking industrial demand – overall demand for silver rose to 1.21 billion ounces, representing a global rise of about 7%, in 2024. The metal is widely used in green energies and applications such as the burgeoning solar industry and electric vehicle (EV) industry – global EV sales saw a 25% increase in 2024, and silver is used in both batteries for EVs and in charging ports. Silver also plays an important role in artificial intelligence technology where it is used in areas such as thermal conductivity and photovoltaic cells.

Then, there is the scarcity issue: In November 2024, the Silver Institute reported that the supply for the metal was set to record a physical deficit in 2024 for a fourth consecutive year, with mining production rising by just 1%.

At this point you may wonder—will Trump 2.0 affect the demand for silver and its performance? After all, on 3 February 2025, President Trump issued two executive orders that appear to set back the progress on EVs and wind power. Yet, investment in clean energy remains strong in other regions with governments introducing initiatives in support of this movement. In January this year, the Chinese government announced that it will renew a trade-in subsidy where buyers that trade in an old car for a new EV or plug-in hybrid will receive a subsidy. Likewise, in December 2024, the European Commission announced a €4.6 billion investment in net-zero technologies, EV battery cell manufacturing and renewable hydrogen.

Taken together, there remains room for silver to grow.

However, it is important to note that that the prices of silver can swing dramatically in the short term compared to gold, which still has more support from central banks and large institutions. If one’s risk appetite is able to stomach such fluctuations, increased interest in silver could propel its price upwards, especially in years to come.

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