Silver prices at record high: What would be the right time to book profits? Track these 2 signals

Silver prices: This year's rally in silver prices has caught investors by surprise. The white metal has surged a whopping 125% and is poised to post the best annual returns in 46 years. Last week, the silver rate on MCX crossed the ₹2 lakh per kilogram mark for the first time — a new milestone.

The silver price rally has also eclipsed the returns offered by gold, which is up around 65% on a year-to-date (YTD) basis.

"While gold remains the primary hedge for Indian investors, silver is increasingly behaving like a leveraged play on both global growth and the energy transition. Its dual role as a monetary and industrial metal makes it particularly sensitive to shifts in interest rates, the dollar, and manufacturing demand," said Rajkumar Subramanian, Head - Product & Family Office, PL Wealth.

Factors behind the silver price rally

The key triggers behind the rally in silver are the demand and supply imbalance, along with the inventory squeeze.

Global mine output has failed to respond to higher prices, plateauing at roughly 810 Moz, levels that are effectively unchanged or lower than five years ago. Secondary supply (scrap) has not surged sufficiently to fill the gap, leaving total supply effectively capped below 1 billion ounces.

While supply has remained stagnant, demand has surged. According to Refinitiv data, silver supply deficits are expected to persist through 2026, estimated at 112 Moz.

Silver’s strength is being driven not just by its role as a precious metal, but increasingly by its industrial relevance. From solar manufacturing and EVs to electronics, India’s clean-energy and manufacturing push is structurally raising silver demand, said Subramanian.

Additionally, besides the stock tightening, silver's addition to the US Geological Survey’s list of critical minerals has amplified speculation regarding potential import tariffs.

NS Ramaswamy, Head of Commodity & CRM, Ventura, said silver is poised to play a pivotal “next generation metal” role across industries critical to the green energy transition and digital transformation over the coming decade, given its growing demand in electronics, alternative energy applications, electric vehicles and artificial intelligence and data centres.

How to spot peak in silver prices?

For the near to medium term, both gold and silver still have room to move higher, say analysts, supported by the weaker dollar, tight supply, expectation of further rate cuts and steady investment and industrial demand.

However, investors should watch specific signals to spot a peak in the rally in silver prices, as per experts.

1. Supply catching up with demand

Ramaswamy said that silver could rally to $100 an ounce (approximately ₹3 lakhs per kg), but history reminds us that spectacular rallies can be followed by epic declines, too.

According to him, when the supply catches up with demand, that would be a signal of PEAK SILVER prices.

2. Gold-silver ratio

Meanwhile, Satish Dondapati, Fund Manager – ETF at Kotak Mutual Fund, said the gold-silver ratio can also signal when silver's outperformance has become stretched. Unlike gold, silver has higher volatility and can succumb to sharp drawdowns.

The current gold-silver ratio (GSR) is about 67.40, the lowest since May 2021. A falling GSR means silver is performing better than gold, which usually happens in the later stages of a precious metals bull market, said Dondapati. In the past, the GSR has been around 60-62 levels.

Therefore, he said that investors should watch the GSR carefully, as it can provide an early signal of when this rally may slow down.

"The gold–silver ratio is close to its long-term average, which supports further upside, but if it falls toward the historical 60–62 range, it may trigger sharper price swings and higher volatility as silver’s outperformance becomes stretched," he cautioned.

In trade today, MCX silver prices were down 0.4% at ₹197,114 per kilogram.

Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.