Silver shines as safe-haven asset, surpassing gold in popularity

The Economist unveils in a new article that silver is stepping out of gold's shadow and shining brighter than ever. Once dismissed as the "poor man’s gold" or the "devil's metal," silver has proven it’s more than just a volatile commodity. 

For years, silver’s volatile price and lackluster returns kept it on the fringes of the precious metals market. But since 2023, silver has not only kept pace with gold but has also outperformed it over the past five years, making it a more mainstream investment option.

Historically, silver’s price movements were expected to mirror those of gold, given their shared characteristics—both are rare, attractive, and chemically inert. Silver, like gold, has long been viewed as a store of value and safe-haven asset, particularly during times of geopolitical uncertainty and rising inflation. Both metals have rallied as investors sought to hedge against inflation, despite the usual trend of prices falling when real interest rates rise.

The silver-to-gold price ratio, however, has not always been consistent. In the 1970s, you needed 30 to 40 ounces of silver to buy just one ounce of gold. Today, that ratio has ballooned to 90. This fluctuation has caused frustration for silver investors, particularly when the market followed the gold price in lockstep, amplifying gains—and losses—for traders.

Recently, silver has been gaining favor with central banks and individual investors. Russian media reported in September that the Russian government plans to purchase silver, and silver exchange-traded funds (ETFs) saw net inflows in 2023 for the first time since 2021. Industrial demand, especially for use in solar panels, has driven imports to China, further driving the price surge.

As global instability continues, silver appears poised to remain a strong alternative for investors seeking security. It may be time for silver to step out of gold’s shadow and claim its place in the spotlight.

By Naila Huseynova