Silver prices in India recently touched an all-time high near ₹2,02,000 per kilogram. They then corrected by around 1.7%, triggering widespread attention among investors, traders, and industrial buyers. To put this into perspective, silver was trading close to ₹90,000 per kg at the end of 2024. That implies a rally of over 110% in less than one year. The acceleration in the past week was especially sharp.
Such a move is extraordinary for a commodity that the market often sees as ‘secondary’ to gold, reigniting the debate on whether silver is the new gold. The key question now is why silver surged so sharply and, more importantly, whether investors should buy now or wait
What Propelled Silver Prices to Record Highs?
1. World Money anticipations and Real Rates.
The change in the global interest rate expectations has been one of the greatest motivations to the recent silver rally. Real yields became soft as the markets started valuing slower hikes in rates and even a future reduction. Precious metals perform better when there is a drop in real interest rates since the opportunity cost of holding non-yielding assets reduces.
Silver is more volatile than gold and it usually responds to these changes. Traditionally, the silver beats the gold in percentage terms on the ease cycles, and this is what is happening.
2. Silver Ratio to Gold Ratio Reversion.
The gold-silver ratio stood about 85-90 of the beginning of 2024, far higher than its long-term mean of 65-70. This was an indication that the value of silver was low as compared to gold.
Silver paced behind gold, at first, but having gathered headway, it rushed on avidly. The ratio has not reached historical extremes even after the recent surge, which underlies the reason why silver received high levels of speculative and institutional flows.
3. Industrial Demand Is No Longer Cyclical- It is Structural.
Also, in contrast to gold, almost half or even two-thirds of the silver demand is industrial-use, solar panels, EVs, semiconductors, electronics, and energy storage. The solar photovoltaic systems alone devour an increasing portion of silver in the world. As renewable energy objectives gain momentum across the world, the demand of silver is no longer cyclical; rather, energy transition themes now structurally drive its demand.
4. Supply Constraints and Mining Economics
Silver supply has not kept pace with demand growth. Global mine production has remained relatively flat, and miners produce a large portion of silver as a by-product of base metals like zinc and copper. This limits the ability of miners to ramp up silver output quickly in response to price increases.
When demand spikes suddenly as it did recently the adjustment happens almost entirely through price, not supply.
5. Speculative Momentum and Futures Positioning
The sharp run-up in the past week shows clear signs of momentum-driven buying and short covering. Once silver crossed psychological levels like ₹1.5 lakh and ₹1.75 lakh per kg, traders triggered stop losses, and momentum funds piled in.
Gold vs Silver vs Equity – Where Should Investors Look Now?
From an asset-allocation standpoint, gold, silver, and equities occupy distinctly different positions in the current macro regime. Gold primarily functions as a real-rate hedge and portfolio stabilizer, exhibiting lower volatility and strong inverse correlation with real yields and currency debasement risks.
Silver, while sharing gold’s sensitivity to monetary conditions, displays higher beta due to its significant industrial demand component, making it more responsive to shifts in global growth expectations and manufacturing cycles. This dual sensitivity explains silver’s recent outsized move but also implies materially higher draw-down risk.
Equities, by contrast, are fundamentally driven by earnings growth, valuation multiples, and liquidity conditions. With equity markets pricing in optimistic growth assumptions while margin pressures persist in parts of the economy, risk-adjusted returns in the near term may be uneven.
In this environment, gold is optimal for downside protection, silver is suitable for tactical or cyclical exposure, and equities warrant selective, fundamentals-driven positioning rather than broad-based risk-on allocation.Investors looking to structure their portfolio with discipline and insight can leverage a Jarvis Invest – the best stock market advisor in India to guide allocation decisions and manage risk effectively.
Conclusion
Silver prices surging to ₹2 lakh per kg is not a mere price spike. It is the convergence of macroeconomic, structural, and positioning forces. The combination of a favourable real rate environment, the mean reversion of the gold-silver ratio, structural increasing industrial demands, and supply-side rigidity has all driven silver into a high-volatility, momentum-driven state.Although the fundamentals are favourable in the backdrop, the pace and sharpness of the recent surge increase near-term correction risk. New aggressive commitments at the present are not as appealing in terms of risk-reward perspective.
On the investment front silver must be seen as a tactical and cyclical investment and not a core defensive one. Gold still provides better portfolio stability, the equities are the main long-term returns generator. Silver is in the middle of it and able to provide an outsized returns response but with a significantly increased draw-down concomitant.
The wise thing is not to pursue the high prices in a market when they are on a record high. Instead, buy selectively in times of retreat or consolidation, as part of a larger, diversified asset-allocation portfolio. Prediction will not be of much value in this cycle, but discipline and positioning will.
