Should we start investing in silver?

In times of crisis and volatile markets, prudence always suggests investing in the safest assets possible: real estate, artworks, gemstones, and, of course, gold. It is perhaps no coincidence that recently gold prices have reached historic highs. Yet, while there is currently a gold rush to secure increasingly fragile wealth, it might make sense, as the WSJ suggests, to experiment with an alternative strategy and instead invest in silver. Historically, silver tends to follow gold with a certain lag, often with even stronger movements. In the past year, silver has recorded a 23% increase, lower than gold’s but still far exceeding the 6% return of the S&P 500 index. A key indicator suggesting that silver is currently undervalued compared to gold is the ratio between their prices. As of April 22, 2025, gold was trading at around $3,500 per ounce, while silver was around $32. This results in a gold/silver ratio of 109, much higher than the thirty-year average of 68. To put this into context: the ratio has exceeded 100 only a few times in recent history, notably during the COVID-19 panic in March 2020 (when it reached 113) and during the global financial crisis of 2008, when it rose sharply from 53 to 80 between June and November.

Following these extreme events, silver experienced strong rallies: after 2020, silver prices rose by 73% within twelve months, while gold appreciated by only 8%. After the 2008 peak, silver grew by 81% in the following year, compared to gold’s 44% increase. Even at the beginning of 2016, when the ratio exceeded 80, silver outperformed gold during the subsequent recovery phase. All this suggests that silver is currently historically undervalued compared to gold, indicating a high probability of future outperformance. Why? The point lies in the fact that silver can be used more widely than gold: in addition to being a monetary metal, silver has important industrial uses, making it more sensitive to economic trends compared to gold. During immediate crises, gold tends to surge, but during economic recovery phases, silver benefits both from industrial demand and from its perception as a safe-haven asset. As explained by the Economic Times, during the commodity boom between 2001 and 2011, for example, gold rose from $250 to $1,800 per ounce, a sevenfold increase. In the same period, silver climbed from $4 to $40, multiplying its value by ten. Silver’s volatility — generally two or three times greater than that of gold — increases risks but also opportunities for higher returns.

However, we cannot yet talk about a silver rush similar to gold, which was heavily purchased by banks around the world in 2024. Metals like gold and silver are more “reserves” than true investments — after all, you can't build a business simply by hoarding gold in a vault. For example, the Economic Times recommends a 5-10% allocation to precious metals, or even 10-15% might be more appropriate — but not more than that. Of course, gold is less volatile, and in the event of a global recession, industrial demand for silver could collapse. Nevertheless, as the WSJ recalls, during the 2008 crisis, swift expansive monetary policies allowed markets to recover within a few months, favoring a strong rebound for silver. Moreover, according to the Lindy Effect cited by the Economic Times, the longer an asset has existed, the greater its probability of future survival. Therefore, silver today finds itself in a historically rare position, appearing undervalued in a macroeconomic context that seems highly favorable for future appreciation.