In the last couple of years, the precious metals, gold and silver, have had a fantastic bull run.
Gold, in 2020, clocked 28% absolute returns, fell -4.2% in 2021, then gained 13.9% in 2022, 15.4% in 2023, 20.6% in 2024, and 74.7% in 2025.
Silver, in contrast, clocked 44.4% absolute return in 2020, fell -8.2% in 2021, then gained 9.7% in 2022, 7.7% in 2023, 17.6% in 2024, and a massive 167.3% in 2025.
A variety of events have been the driving factors:
- The COVID-19 pandemic.
- The Russia-Ukraine war.
- West Asia war.
- Trump 2.0 protectionist policies.
- Trade wars.
- Inflation risk.
- Partial shutdown of the US.
- Rise in global debt (nearly US $353 trillion at the end of the first quarter of 2026, according to the latest Institute of International Finance Global Debt Monitor).
- Vulnerable rupee against the greenback.
- Central banking buying (mainly gold and some, such as the Bank of Russia, the Saudi Central Bank, and the Reserve Bank of India (RBI) are buying silver amidst the de-dollarisation).
- In the case of silver, higher demand from industries versus the structural supply deficit for several years.
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In 2026, gold and silver continue to shine. Gold, so far on a year-to-date basis, is up 13.2%, while silver 9.5% (as of 15 June 2026).
However, the start of the West Asia war (between the US and Iran) has presented a fascinating paradox. Prices of gold and silver in rupee terms have corrected 5.3% and 5.6%, respectively, from 28 February 2026 to date (as of 15 January 2026). A stronger US Dollar, certain central banks raising interest rates to control inflation, and liquidity pressure are among the factors behind it.
Over the last 5 years gold and silver, in Indian rupee terms, have posted absolute returns of 211.4% and 252.1%, respectively, as of 16 January 2026.
Where are gold and silver prices headed going forward?
Speaking about gold, as long as macroeconomic and geopolitical uncertainty prevails, gold would do well.
Note that while the US and Iran have agreed to a ceasefire, we need to see whether lasting peace in West Asia is truly possible.
Considering this and other factors in play, particularly the de-dollarisation strategy, central banks are expected to keep buying gold. In a survey of 74 central banks, 45% said they plan to buy in the coming year, according to data collected by the World Gold Council and YouGov Plc.
However, the path to interest rates would also be an important factor.
Certain central banks, such as the ECB and the BoJ, have already raised rates by 25 bps as inflation has risen. In the US, the Federal Reserve (Fed) is likely to keep rates unchanged, given that inflation has risen. The RBI, too, has so far maintained a status quo on the policy rates. If policy interest rates rise as inflation rises, gold may not rise as spectacularly as in the past.
As for silver, it is not just a precious metal today but also an industrial metal. It is used in automobiles (particularly in EVs), solar energy (for solar panels), batteries, satellites, semiconductors, 5G technology, medicines (due to silver's antimicrobial properties), medical instruments, chemicals, and much more.
Central banks such as the Bank of Russia, the Saudi Central Bank, and the Reserve Bank of India (RBI) are buying silver amidst the de-dollarisation.
Currently, demand for silver is outstripping supply -- and this has been the case since 2019. Higher demand is driving silver prices higher.
The supply is struggling because silver is largely a byproduct of mining other metals like copper, zinc, and lead. That's why silver is often called 'half copper, half gold'.
As long as industrial and economic growth expand, demand for silver is expected to outstrip supply.
If green technology adoption and silver's application in AI data centres for high-conductivity management align with global corporate projections, the white dual metal is expected to fare well.
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How to Approach Gold, Silver?
Both gold and silver have distinct traits. The precious yellow metal is largely a safe haven, while silver is an industrial metal today.
Gold is a counter-cyclical. Meaning, in times of economic uncertainty, gold usually commands a store of value, serves as a hedge, and proves to be an effective portfolio diversifier.
Silver, on the other hand, is procyclical. Meaning, its fortune has been closely linked to industrial growth, development, and economic expansion. However, keep in mind that silver is more volatile than gold.
Currently, the gold-silver ratio (calculated by dividing gold's price by silver's price and serving as an indicator of their relative value) is near 62. It has moved up a bit after falling below 50 at the end of January 2026, but is still noticeably below its last peak, which was over 100.
It makes sense to strategically approach gold relative to silver. The collapse in the ratio shown in the graph above indicates that silver has drastically outperformed gold over the last 18 months, pushing its relative valuation to extreme highs.
At around 62, the gold-silver ratio is well below its historical 10-year average, which sits roughly around the mid-70s. Gold is currently undervalued relative to silver.
If macroeconomic and geopolitical uncertainty persists, the precious yellow would continue to exhibit its sheen.
But given that gold prices are already elevated, it makes sense to make small, systematic investments rather than invest a lump sum.
For this, SIP into gold savings funds make more sense to handle volatility (with inherent rupee-cost feature) while you endeavour to compound wealth. Around 10-15% of your total investment portfolio can be allocated to gold with a long-term view (of 5-10 years or more).
If you have a high-risk appetite, you could allocate around 5-10% to silver (via silver ETFs) for diversification and to benefit from industrial and economic demand, while keeping a long-term view.
Invest sensibly.
Happy investing!
Disclaimer: The views expressed in this article are solely those of the author and do not necessarily reflect the opinion of NDTV Profit or its affiliates. Readers are advised to conduct their own research or consult a qualified professional before making any investment or business decisions. NDTV Profit does not guarantee the accuracy, completeness, or reliability of the information presented in this article.
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