Could Silver Be the Next Big Winner? History Points to a Potential Surge

With gold reaching record highs, silver could soon follow – and even outperform

Gold’s Rise Sets the Stage

Gold’s recent rally has cemented its reputation as a safe haven during global uncertainty. The yellow metal hit record highs earlier this week before cooling slightly after US President Donald Trump softened his stance on trade and the Federal Reserve.

Despite the pullback, gold remains up around 41% over the past year and has delivered a 113% return so far this decade, outstripping the S&P 500’s 78% rise, according to FactSet data. Investors seeking shelter from geopolitical and economic shocks continue to flock to gold.

Is Silver’s Turn Next?

While gold dominates the headlines, silver may soon steal the spotlight. Historically, silver tends to rally after gold surges, often outperforming once markets stabilise.

Silver shares gold’s appeal as a safe-haven asset, particularly during times of inflation and crisis. However, it also boasts strong industrial demand in sectors like electronics and solar energy. This dual role means silver can initially lag behind gold but often outpaces it during economic recoveries.

Gold-Silver Ratio Signals Opportunity

A critical indicator for investors is the gold-silver ratio, which measures how many ounces of silver equal the price of one ounce of gold.

• As of Wednesday, the ratio stood at 98, well above the 30-year average of 68.
• This suggests silver is significantly undervalued relative to gold.

Historical trends reinforce this view. For example:

• After the 2020 COVID-19 market crash, when the ratio hit 113, silver surged 73%, compared to gold’s 8% rise.
• Following the 2008 financial crisis, silver rallied 81%, comfortably outpacing gold’s 44% gain.
• A brief market scare in early 2016 also saw silver outperform after the ratio exceeded 80.

These patterns suggest that silver typically shines brightest after periods when gold dominates.

Risks and Rewards

Silver’s industrial exposure means it is more vulnerable during severe economic downturns. A major global recession could delay its rally. However, history shows that silver tends to rebound strongly with economic recovery, helped by monetary stimulus and increased industrial demand.

Conclusion

With gold basking in historic highs and economic uncertainty still looming, silver appears poised for its own breakout. The elevated gold-silver ratio, combined with historical precedent, points to significant upside potential for silver in the coming months.

While investors should remain mindful of global economic risks, history suggests that silver may not just catch up to gold—it could very well outshine it.

Sources: (Investing.com, Reuters.com)