Silver prices set to outshine gold in 2025, can rise to ₹1,25,000 per kg

Silver has emerged as one of the top-performing assets of the year, surging 18.85% internationally and 15.20% domestically. Factors like monetary easing, a weakening dollar, and industrial demand for solar and electronics are driving this growth, with expectations for continued strength in 2025.

This remarkable surge is fueled by a powerful combination of factors, including the aggressive monetary easing policies implemented by various central banks, a weakening dollar index (retreating from highs above 110 to around 103), persistent geopolitical risks, and the economic uncertainty stemming from Trump's ongoing trade disputes.

Beyond its safe-haven appeal, silver benefits from its dual nature as both a precious and an industrial metal. Its demand is burgeoning across diverse industrial applications, including solar panels (critical for the green energy transition), cutting-edge 5G technologies, and a wide range of electronic equipment. This robust industrial demand, coupled with a silver market facing consistent deficits for the past four years (a trend projected to continue throughout 2025), creates a compelling supply-demand imbalance.

Furthermore, silver has been historically undervalued compared to gold. Its recent breakout above the crucial $32 per ounce level, after years of consolidation, has confirmed its underlying bullish momentum and signaled a potential shift in market dynamics.

Silver Price Outlook

The Federal Reserve's anticipated rate cuts in 2025 are poised to further accelerate silver's upward trajectory. Lower interest rates typically weaken the dollar, making silver more attractive to international investors.

Moreover, several long-term trends support the continued strong demand for silver from its diverse applications. The global push towards green energy, with its reliance on solar power, will drive significant demand for silver in photovoltaic cells. The rapid advancement of AI technology, with its demand for high-performance electronics, will further boost industrial demand. Finally, ongoing trade and geopolitical tensions will reinforce silver's safe-haven appeal, providing additional support for its price. The widening demand-supply gap further enhances its attractiveness as an investment.

The Gold-Silver Ratio

Silver is likely to outperform gold in 2025, a view supported by the gold-silver ratio, which is currently encountering significant resistance at the 92.50 mark.

A sustained decline in this ratio would indicate a relative strengthening of silver versus gold. In such a scenario, silver could potentially target $36 per ounce in the medium term and $42 per ounce in the long term. Domestically, silver prices could surge to ₹110,000–125,000 per kg over the medium to long term.

(The author is the Founder of SS WealthStreet. Views expressed are personal and not of Mint. We advise investors to check with certified experts before making any investment decisions.)