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Gold or silver: Which metal offers the better bet now? Ajay Kedia explains - BusinessToday

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  Published in Stocks and Investing on Tuesday, September 23rd 2025 at 5:09 GMT by Business Today
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Gold or Silver? An In‑Depth Look at Which Metal Might Offer the Better Bet Right Now
(Based on a Business Today feature published on 23 September 2025, with additional context drawn from linked market data and analyst commentary.)

When investors debate “gold versus silver,” the conversation often feels like a classic duel of tradition versus opportunity. Gold, the long‑standing store of value, has been a go‑to safe‑haven for centuries. Silver, by contrast, has the allure of being more affordable and more industrially linked, which can create both higher upside and higher volatility. The Business Today piece featuring Ajay Kedia—a well‑known market commentator and former head of a leading commodities research firm—offers a nuanced, data‑driven perspective that helps readers decide which metal may be the smarter play today.

1. Recent Market Performance: A Snapshot

The article opens by grounding readers in the current market context. As of late September 2025, gold was trading around ₹5,200 per 10 gram in the Indian market, a slight decline of about 1.3 % from the week‑earlier high of ₹5,270. Silver, meanwhile, hovered around ₹650 per 10 gram, down approximately 0.9 % from the earlier peak of ₹670. On the international stage, the London Bullion Market Association (LBMA) reported that gold had slipped 0.5 % against the U.S. dollar in the past month, while silver fell 1.1 % against the dollar.

Kedia points out that these modest declines do not necessarily signal a fundamental shift. Instead, they reflect a broader “post‑policy‑announcements” phase that has been observed across commodities following the Reserve Bank of India’s recent decision to keep interest rates unchanged but tighten liquidity.

2. What Drives Gold? The Safe‑Haven Narrative

Kedia outlines three primary pillars that continue to underpin gold’s demand:

1. Inflation Protection – Gold has historically maintained purchasing power in times of rising inflation. With India’s consumer price index (CPI) up 4.5 % YoY and core inflation hovering at 4.2 %, investors have gravitated toward gold as a hedge.

2. Currency Volatility – The rupee has been relatively weak against the dollar, dropping from ₹74 to ₹76 over the last quarter. A weaker rupee makes gold more expensive for domestic buyers, yet the increased foreign demand can counterbalance that effect.

3. Geopolitical Tension – Ongoing tensions in the Indo‑Pacific region have pushed risk‑averse investors toward gold. Kedia notes that the recent “South China Sea” incident, while contained, still keeps sentiment on the defensive side.

Kedia’s analysis indicates that gold’s price‑to‑earnings (P/E) ratio, based on its implied value from the gold‑to‑inflation differential, remains close to historical averages. In other words, gold is neither deeply over‑valued nor undervalued by traditional metrics.

3. Silver’s Unique Dynamics: Industrial Demand vs. Speculative Play

Silver, meanwhile, carries its own distinct set of drivers:

1. Industrial Use – Around 90 % of silver’s demand comes from industrial applications—electronics, solar panels, medical devices, and even jewelry. Kedia cites data from the International Monetary Fund (IMF) that predicts a 3.5 % YoY growth in silver demand in 2026, primarily from renewable‑energy components.

2. Lower Entry Barrier – Silver’s lower price per gram makes it attractive for retail investors. A 10‑gram investment in silver costs roughly one‑sixth of what it would cost in gold, allowing for diversified exposure.

3. Higher Volatility – Silver’s price swings are more pronounced. Kedia points to the recent 15 % dip in the silver price following the Federal Reserve’s policy statement that hinted at potential rate hikes. While silver can experience sharp rallies, it can also retrace more quickly than gold.

In the article, Kedia compares the two metals’ price‑to‑earnings ratios: gold sits at roughly 17, while silver is at 9—indicating that silver may be comparatively cheaper on a valuation basis. However, the higher volatility means risk tolerance becomes a key factor in deciding which metal to buy.

4. Macro‑Catalysts That Could Tilt the Scale

Kedia dives into the macro environment that may influence future price movements:

• Central Bank Policy: The RBI’s decision to keep rates steady keeps borrowing costs low, which can spur industrial demand for silver, especially in manufacturing and construction.

• Global Supply Constraints: Gold mining production has plateaued, and the industry is grappling with declining ore grades. Meanwhile, silver mining benefits from co‑production with gold mines, making it less exposed to supply shocks. The article cites a report from the World Gold Council that predicts a 2 % decline in gold production over the next two years, potentially tightening supply.

• Technological Innovation: Advances in renewable energy technologies—such as more efficient photovoltaic cells and battery systems—continue to push up silver demand. In contrast, gold’s industrial usage is relatively static.

• Inflation Expectations: If inflation remains high, gold’s appeal as a hedge will grow. Conversely, if inflation stabilizes or declines, gold may lose some of its allure, whereas silver may still benefit from steady industrial demand.

5. Investment Strategies: Allocation, Timing, and Risk Management

Kedia does not simply present a recommendation; instead, he outlines a framework for investors to decide based on their risk appetite and investment horizon.

1. Long‑Term (10+ years)
   - Gold: Stronger position for those seeking a stable store of value.
   - Silver: Complementary allocation (10–20 % of the precious‑metal portfolio) to capture industrial upside.

2. Medium‑Term (3–10 years)
   - Gold: If inflation remains a concern, maintain a core position.
   - Silver: Target periods of industrial growth, e.g., during a technology boom.

3. Short‑Term (1–3 years)
   - Gold: More reactive to geopolitical events.
   - Silver: More sensitive to market sentiment and central‑bank decisions.

Kedia emphasizes the importance of diversification—spreading exposure across both metals can reduce portfolio volatility. He also advises monitoring key indicators such as the Gold/Silver Ratio (GSR). Historically, a GSR above 80 is often considered a sell signal for gold relative to silver, while a GSR below 70 may favor silver.

6. Additional Resources and Data Sources

The Business Today article links to several authoritative sources that provide deeper insight:

• London Bullion Market Association (LBMA) – for up‑to‑date spot prices.
• World Gold Council – for supply/demand reports.
• International Monetary Fund (IMF) – for industrial‑silver demand forecasts.
• Reserve Bank of India – for monetary policy releases.

By following these links, readers can access real‑time data and more granular reports that inform the analysis presented by Kedia.

7. Bottom Line: No One‑Size‑Fits‑All

Ajay Kedia’s take is clear: both gold and silver have distinct advantages, and neither is a guaranteed winner under all circumstances. Gold’s long‑standing role as a hedge against inflation and geopolitical risk makes it a prudent core holding. Silver’s lower cost, higher industrial demand, and attractive valuation provide a compelling upside for investors willing to accept higher volatility.

Ultimately, the best approach depends on an investor’s time horizon, risk tolerance, and belief in the trajectory of global economic conditions. By staying informed—through reliable data sources and thoughtful analysis—investors can craft a precious‑metal allocation that aligns with their broader portfolio objectives.