Gold vs Silver: Despite the sharp rally in gold and silver prices, current levels still present an investment opportunity for long-term investors. Speaking on a Business Today show, Vandana Bharti of SMC Global Securities said investors can gradually increase their exposure to gold and silver for the long term. In particular, instead of buying physical gold and silver, investing through Exchange Traded Products (ETPs) could be an option.
How Have Returns Been Over 10 Years?
According to Vandana Bharti, looking at data from the past 10 years, gold has delivered a CAGR of around 14%, while silver has returned approximately 17% to 18%. She noted that silver’s returns over the past four years have been even stronger.
However, with high interest rates globally, investors are questioning whether the rally in gold and silver could be limited going forward. According to Bharti, factors such as festive demand, central bank buying, and currency weakness are supporting prices of both metals.
Silver Demand Expected to Rise
Bharti appears more confident about silver. According to her, in many new sectors, it is difficult to substitute silver with any other material. Demand for silver is rising in areas such as photovoltaic applications and data centres. It has also been included in the critical minerals list.
Silver benefits from being a safe-haven investment during times of uncertainty, while simultaneously seeing rising demand from technology and energy-related sectors.
Supply Shortage Expected Over the Next Three Years
Bharti also mentioned the possibility of a decline in silver production over the next three years. This could limit silver’s availability in the market and extend the bullish phase through 2027 and 2028.
In the case of gold too, supply is not rising rapidly. According to Bharti, annual gold production growth is only about 1.5%. She estimates that over time, prices of both metals could rise by approximately 14% to 17% annually.
ETF Option for Small Investors
For small investors, Bharti suggested Exchange Traded Products such as Gold BeES and Silver BeES as better options. Investment can be started with a small amount through these, whereas buying even one gram of physical gold requires a larger sum.
She also highlighted the importance of taxes. According to her, holding investments for the long term can reduce the tax impact, while short-term trading is taxed according to the applicable slab rate. Therefore, instead of investing the entire amount in gold and silver at once, investors can invest gradually over the long term.
Disclaimer: This article is for informational purposes only and should not be considered investment advice in any form.
