With silver prices surging over 60% year-to-date, Kotak Mutual Fund suggests that investors may view any price correction as a buying opportunity, even as some profit booking occurs at current levels.

“Silver prices have risen 69% so far this year. While some profit booking may happen at current levels, any healthy correction could present a potential entry point for investors,” the note added.

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Kotak Mutual Fund said silver’s global relevance as a strategic asset continues to rise, driven by its affordability, growing investment demand amid geopolitical tensions and market volatility, increasing industrial demand, a global resurgence in jewelry consumption, and a persistent demand-supply imbalance.

Highlighting silver’s role as a potential hedge during crises, Kotak noted that the metal has historically provided both long-term wealth security and financial safety in uncertain times.

Historical performance during market shocks:

- Taper Tantrum (Jan–Aug 2013): Nifty 50 TRI fell 7%, silver down 6%.

- Subprime Mortgage (Jan 2008–Feb 2009): Nifty 50 TRI declined 54%, while silver gained 13%.

- Covid-19 Pandemic (Feb–Mar 2020): Nifty 50 TRI dropped 33%, silver corrected only 14%.

- Russia-Ukraine War: Nifty 50 TRI corrected 10%, silver rose 12%.

- Recent market fall (from Sep 2024 peak): Nifty 50 TRI down 15%, silver up 3%.

The Gold-Silver ratio (GSR) currently stands at 83:1 USD, compared with a historical average of 60:1, making silver more affordable relative to gold and enhancing its investment appeal.

What is the Gold-Silver Ratio?

The GSR measures how many ounces of silver are required to buy one ounce of gold. The ratio rises when gold prices increase faster than silver, and falls in the opposite scenario.

Kotak Mutual Fund added that a higher GSR typically signals a potential opportunity to buy silver and sell gold, while a lower ratio may indicate the reverse.

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Kotak Mutual Fund highlighted that silver is not only an investment asset but also a key industrial commodity, with nearly 50% of global demand coming from industrial manufacturing. In 2024, industrial demand for silver reached a record 680.5 million ounces.

Silver has experienced a structural deficit for the past four years, with a projected 21% deficit in 2025, marking the fifth consecutive year of shortfall and adding further upward pressure on prices.