Silver seen as strategic bet, prices may surge 15–20% over next 2 years: Client Associates
ADVERTISEMENT In its latest report, CA positions silver as both a strategic asset class and a powerful portfolio diversifier with strong medium-term return potential.
'Silver is no longer just a precious metal—it is a modern asset class backed by industrial relevance and historical trust, offering a compelling dual advantage,' said Nitin Aggarwal, Director – Investment Research and Advisory at Client Associates. 'For investors seeking tactical alpha along with diversification, silver offers a unique blend of opportunity and resilience.'
Client Associates notes that silver is uniquely positioned at the intersection of defensive and growth strategies. While it shares gold's traditional role as a monetary hedge, its applications in solar energy, electric vehicles, semiconductors, and 5G infrastructure lend it substantial industrial weight.This dual nature links its price trajectory to both economic uncertainty and global technology cycles.
ADVERTISEMENT 'Silver combines defensive and growth characteristics, making it highly relevant in today's macro environment,' the report stated, highlighting its potential as a modern portfolio component.The report identifies a persistent supply-demand mismatch as a key structural driver. In 2024, the global silver market saw its fourth consecutive annual deficit, with supply falling short of demand by around 149 million ounces.
ADVERTISEMENT This shortfall is expected to persist in 2025 amid rising consumption and limited mining and recycling capacity.
While total demand in 2024 dipped slightly due to a slowdown in investment and silverware categories, industrial demand rose 3.6% year-on-year, hitting a record high for the fourth straight year.
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Client Associates notes that the gold-silver ratio—currently around 90—is well above its long-term average of 68, indicating that silver remains undervalued relative to gold. If gold prices stay stable, silver has room to outperform.
The report also highlights silver's value in portfolio diversification, citing its low correlation with the Sensex (0.21) and moderate correlation with gold (0.72). 'Silver offers higher short-term return potential—albeit with greater volatility and sharper drawdowns,' CA added, suggesting its use for both defensive and tactical allocations.
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The report outlines suitable investment routes depending on investor preferences. For short-term investors with Demat accounts, Silver ETFs are a cost-effective and tax-efficient option. For long-term investors without Demat access, Silver ETF Fund-of-Funds (FoFs) offer convenient exposure with added liquidity.While the outlook is bullish, Client Associates cautions about potential risks such as increased mining output, a slowdown in industrial growth, and material substitution in sectors like electronics and solar.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
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