Gold vs Silver: Which metal should you bet on this festive season

Gold vs Silver: Confused about which metal to buy on this Diwali—silver or gold? Here’s what you need to know to make an informed choice. Motilal Oswal Financial Services Ltd (MOFSL) anticipates notable gains for both metals, but silver may have an edge, thanks to rising industrial demand and strategic shifts in clean energy technologies.
 

Is silver outpacing gold in return?

Silver has shown notable growth this year, with domestic prices surging over 40 per cent, driven by its dual role as a safe-haven asset and an essential industrial material. Currently priced above Rs 1,00,000 per kilogram, silver is expected to reach Rs 1,25,000 per kg on the Multi Commodity Exchange (MCX) and $40 per ounce on COMEX over the next 12-15 months. This trend is supported by rising demand in industries like renewable energy and electronics.

Vedanta Group Chairman Anil Agarwal recently voiced his optimism for silver on X (formerly Twitter), highlighting its transition from a traditional asset to an essential component of green technologies.

"In India, prices have crossed Rs 1 lakh per kg, with demand doubling from last year. Silver is now widely used in solar panels, EVs, and advanced electronics, making it a critical resource for the future," Agarwal stated.
 

Can silver become more precious than gold?

Silver is shining. 

In India, prices have crossed Rs 1 lakh per kg! Demand has doubled from last year.

Silver's demand is being driven not just by its traditional uses but by massive industrial demand. 

It is now being used… pic.twitter.com/JAE4TLlxjr

— Anil Agarwal (@AnilAgarwal_Ved) October 24, 2024

Vedanta subsidiary Hindustan Zinc, which operates a fully solar-powered refinery, plays a major role in global silver production, and Agarwal expressed his goal to make it the top producer worldwide.

What about the classic safe-haven?

Despite silver’s potential, gold remains the gold standard for stability. MOFSL forecasts that gold prices could rise to Rs 81,000 per 10 grams in the medium term and Rs 86,000 in the long term. Known for its role in hedging against market uncertainty, gold has consistently outperformed in the long term, with average annualised returns of 23.7% in the last year alone.

“While gold offers stability and diversification benefits, silver's higher volatility can lead to greater returns,” says Arpit Suri, CA and personal finance expert.

Key things you should consider

Gold’s lower price volatility and status as a safe-haven asset make it ideal for investors seeking security. With nearly half of mined silver going into industrial applications, silver is more vulnerable to economic cycles, often rising during expansions and declining in downturns. This economic sensitivity introduces potential for higher returns but also greater risk.

For those seeking affordability, silver’s lower cost per ounce makes it accessible for retail investors. However, silver’s bulkier nature requires more storage, which can add to logistical costs. Both metals are highly liquid, but gold's broader appeal and demand give it an advantage in terms of market liquidity.