To invest in precious metals from a diversification standpoint, gold and silver are two meaningful avenues. In recent times both these precious metals have made all-time highs.
In Indian rupee terms, on April 22, 2025, the price per 10 grams of 24k gold crossed Rs 1 lakh amid geopolitical and macroeconomic uncertainty, along with weakening in the US dollar. On March 28, 2025, the price of silver per kg also passed Rs 1 lakh backed by industrial demand.
If we consider gold-to-silver ratio, which is calculated by dividing gold price by silver, it has crossed a little over 100 as of April 30, 2024.
The graph above shows that a remarkably high gold-to-silver ratio was also the case during the COVID-19 pandemic.
While this ratio plunged for a brief while thereafter, it once again has been on an upward trend and more pronounced since last year. At present this ratio, a little over 100:1, is noticeably higher than the decade-long average.
What this ratio denotes is that silver is currently undervalued compared to gold. The precious yellow metal in recent years has witnessed a fast run-up. Going by the present ratio, you would be able to purchase 100 ounces of silver to one ounce of gold.
In other words, a higher gold-to-silver ratio seemingly indicates that silver is reasonable or cheap as the case may be from an investment standpoint compared to gold, and vice versa.
That being said, since the lows of the COVID-19 pandemic, both gold and silver have delivered handsome absolute returns of +137% (i.e. +18% CAGR) and 178% (i.e. +22% CAGR) in Indian rupee terms as of April 30, 2025.
One can say that during the pandemic, investors who chose to invest in the white metal were rewarded better.
Is There an Upside Potential for Silver Even Now?
Well, apart from being a precious metal that holds cultural significance in India and is symbolic of wealth and prosperity, it’s also an industrial commodity.
Silver is used in electronic goods, solar panels, switches, electric vehicles, medical instruments, satellites, 5G technology, Internet of Things (IoTs), many other applications.
Hence, the fortune of silver as an asset class is closely linked to the outlook for the industrial world and the overall economy.
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