Seeking Alpha sees silver as undervalued vs gold, citing strong industrial demand and potential breakout above $34-$35.

Seeking Alpha sees silver as undervalued vs gold, citing strong industrial demand and potential breakout above $34-$35.

Silver prices in the physical market have once again crossed the ₹1 lakh per kilogram mark, reaching an effective price of ₹1,01346.76 per kg after including a 3% Goods and Services Tax (GST). This significant move is driven by a rare structural mismatch between supply and demand, with industrial demand rising while mining and recycling supplies remain relatively stagnant [1].

The silver market's tightness and long-term underperformance relative to gold have brought the gold-to-silver ratio under scrutiny. Historically, a mean of 68:1 is considered equilibrium, but recent levels around 100:1 suggest silver may be undervalued. If gold prices hold steady and the ratio reverts to its historical average, silver could rise to around ₹165 per gram, implying an upside of nearly 70% from current levels [1].

Seeking Alpha has also noted that silver appears to be undervalued relative to gold, citing strong industrial demand and the potential for a breakout above $34-$35. The growing role of silver in green technologies, particularly solar panels, electric vehicles, and electronics, is contributing significantly to overall consumption. This industrial component provides an additional catalyst beyond monetary demand, as technological adoption, especially in emerging economies, is steadily pushing up the demand floor [1].

However, analysts caution against excessive enthusiasm. Silver is notoriously volatile, and investors are advised to adopt a tactical approach with a portfolio allocation of no more than 5%, clear profit targets, and strict stop-losses. With both structural fundamentals and speculative interest aligning, silver appears to be regaining the attention it once commanded.

References:
[1] https://economictimes.indiatimes.com/markets/commodities/silver-price-breaches-rs-1-lakh-per-kg-mark-again-in-physical-market/articleshow/121337334.cms