Will Silver Beat Gold in Terms of Return on Investment in the Future Market?

In recent years, the performance of precious metals such as silver and gold has attracted considerable attention from investors. While silver and gold are both valuable commodities, recent price fluctuations offer insights into their potential returns and future trends.

Comparative Analysis of Silver and Gold Prices

Let's delve into the price data from the past three years of silver to better understand the return on investment for each.

Silver Prices (Rs/- per Kg)

November 2022: 64330 April 2021: 74000 April 2020: 42700 April 2019: 41000 April 2018: 43800

Now, let's look at the gold prices in the same timeframe:

Gold Prices (Rs/- per 10gm)

November 2022: 47943 April 2021: 49860 April 2020: 48460 April 2019: 32840 April 2018: 28560

By analyzing these data points, we can easily see the returns in both categories, providing a clear picture of the performance of silver and gold. As of 2021, silver prices have seen significant fluctuations, aligning well with the broader market trends.

Investment Considerations for Silver

Silver is a very viable investment option, especially for those who are looking for higher returns compared to gold. Silver has a higher beta, with a beta of approximately 30. When gold rises by 1%, silver is expected to move by 1.3%. This factor makes silver more volatile but also potentially more rewarding.

Unlike gold, which is recycled and reenters the market, the vast majority of silver is consumed and does not come back into circulation. This consumption across various sectors, such as artificial knee joints, paints, and chemical industries, highlights silver's practical use and long-term value.

Additionally, silver is increasingly in demand for electric vehicles, solar power, and alternative sources of energy. These sectors are predicted to see a significant demand spike in the coming years, setting silver up for potential appreciation. While this growth is expected to occur in the medium to long term, investors should consider this trend when making their investment decisions.

Industrial Demand Drives Silver

Silver has a broad range of industrial applications. Its use in electrical systems and technological advancements has driven vibrant demand. In fact, several years ago, Warren Buffet visited India specifically to purchase silver due to India's status as the largest market for precious metals.

Warren Buffet's visit underscores the strategic importance of silver in the market. Moreover, silver's exposure to these growing industries suggests that it may have better growth prospects compared to gold. However, the nature of silver's price movements is more sensitive, meaning that sharp fluctuations can occur.

Historical Skewness in Price Trends

Historical data also reflects fluctuations:

Silver: In 2010, the price of silver was Rs27255 per Kg. By 2021, it reached a peak of Rs73000, yielding a profit of Rs46000.

24Karat Silver at 10 Grams: In 2010, it was priced at Rs18500, peaking at Rs50000 in 2021, resulting in a profit of Rs31500.

These calculations highlight the significant returns that can be achieved with silver investments over a decade. However, it's crucial to consider the impact of inflation to accurately gauge real returns.

Investors should note that, despite silver's promising trends, the market is not without its fluctuations. Gold, on the other hand, has historically shown more stable pricing, making it a preferred choice for some investors seeking a conservative approach.

Conclusion

To sum up, while silver offers higher returns and is increasingly relevant due to its growing demand across various industries, it also comes with higher volatility. Gold, although less volatile, provides a more stable investment option.

For long-term investors focusing on appreciation potential, silver might be the more suitable choice. However, short-term traders and those seeking more stable returns might prefer gold. Ultimately, the decision should be based on individual investment goals and risk tolerance.

Thank you for your interest in?silver investment and its potential.