Should you invest in silver or gold?

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Precious metals are seen as a must have in India since ages, not just in form of jewellery, but also as an investment. Both gold and silver are considered to be lucrative investment options, but which one is better?

Silver is often considered as gold’s poor cousin, even though its price usually move in tandem with the latter. Despite higher affordability and industrial uses, silver has maintained a fairly low profile against gold.

However, silver has outperformed the yellow metal this year, especially post Covid-19 pandemic. After the bull run in 2020, gold prices started stabilising but silver, which had traded 47% higher than last year, is still going up.

In fact, many analysts expect silver to outperform gold this year as silver has a dual nature as it is not only used as a hedge against inflation– like gold – but also an industrial commodity. Silver is used in the manufacture of a variety of things, from glitzy jewellery to humble batteries, from medical equipment to microcircuits. It’s also at the forefront of some innovative fields.

This implies that silver is more business cycle -sensitive than gold. Therefore, given that the global economy is recovering from the deep recession caused by the coronavirus pandemic and the Great Lockdown , silver may outperform gold.

Anuj Gupta, VP, Commodity and Currency Research, IIFL Securities, “Gold is hedge against inflation and uncertainty, but silver is better than gold for investment in terms of return. This year we have noticed that the demand of industrial metal has increased significantly due to increase in production of electric vehicles and demand of medical equipment and also in 5G technology. Therefore, we see in 2021 silver prices  may not only rise and may also outperform gold.”

“We expect silver to test $40 to $45 an ounce levels till year end”, he added.