Will Silver Outpace Gold in 2025?

Will Silver Outpace Gold in 2025?
Published on: Jan 20, 2025

In 2024, both gold and silver prices surged significantly, with gains exceeding 20%, outperforming most asset classes. Overall, gold outperformed silver, with gold prices rising 27% last year, marking the largest annual increase since 2010, while silver saw a 21% gain over the same period. Entering 2025, diversified commodity investments, including gold and silver, are expected to continue performing well.

However, can silver overtake gold this year and emerge as a new investment hotspot?

Silver Outperforming Gold

Ole Hansen, Head of Commodity Strategy at Saxo Bank, stated that gold and silver remain the top investment choices for 2025 due to their inflation-hedging properties and safe-haven status in times of economic uncertainty. However, compared to gold, he is more optimistic about silver.

According to Hansen’s forecast, gold prices will rise to $2,900 per ounce this year, representing a gain of about 7%. In contrast, he sees greater potential in silver, projecting prices to reach $38 per ounce, nearly a 30% increase from current levels. The reason for this is that silver serves as both a monetary and an industrial metal.

In 2024, the rise in industrial demand led to physical tightness in the silver market. Industries such as electronics and renewable energy, especially photovoltaic (solar) technology, significantly boosted demand. Sustained industrial demand is expected to keep the silver market in a supply deficit in 2025, potentially exacerbated by increasing ‘paper’ demand through exchange-traded funds (ETFs).

As silver continues to outperform gold, Hansen expects the gold-to-silver ratio to fall from its current level of 88 points to approximately 75 points.

Daniel Boston, founder of Preserve Gold, shares a similar view, believing that silver will outperform gold in 2025. In his opinion, the current price of gold is at an absolute peak, whereas silver, compared to its historical high of nearly $50, still has considerable room to grow. This suggests that silver has more upside potential but less downside risk.

Additionally, Jose Gomez, a partner at Summit Metals, and Randy Smallwood, CEO of Wheaton Precious Metals, both emphasize the industrial demand for silver. Silver is increasingly needed for solar energy investments, new electric vehicle battery solutions, and military electronics.

Silver Won’t Outpace Gold

Not everyone is so optimistic.

Michael Martin, Vice President of Market Strategy at TradingBlock, believes it is very unlikely that silver will outperform gold in 2025. In an inflationary environment, investors typically flock to gold first. Coupled with Bitcoin “diverting” attention, traditional inflation hedges like silver could become more sidelined.

Luciano Duque, Chief Investment Officer at C3 Bullion, also stated that although silver has greater potential upside in the long run, he does not believe silver will outpace gold this year but will continue to follow gold’s trajectory.

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