Gold–Silver Ratio Drops from 110 to 65: Is This the Right Time to Invest in Precious Metals?

Gold and silver have once again taken center stage in global financial markets. With both metals delivering exceptional returns in 2025, investor interest has surged sharply. One of the most striking developments is the sharp fall in the gold–silver ratio, which has declined from around 110 to nearly 65. This shift has sparked an important question for investors: should you consider investing in gold and silver now?

According to a recent commodities outlook report by Motilal Oswal Financial Services, the performance of precious metals over the past year reflects changing investment preferences, supply constraints, and rising global uncertainties.

Gold and Silver Delivered Stellar Returns in 2025

The year 2025 turned out to be highly rewarding for precious metal investors. Gold prices rose significantly, delivering returns of around 76 percent over the year. However, silver outperformed gold by a wide margin, generating nearly 170 percent returns.

This sharp outperformance by silver led to a steep correction in the gold–silver ratio. Traditionally, a higher ratio suggests gold is expensive relative to silver, while a falling ratio indicates stronger silver performance. The recent drop to the 65 level highlights how aggressively silver prices have risen compared to gold.

On January 12, gold prices touched an all-time high, reflecting strong global demand and supportive macroeconomic conditions.

Limited Supply Supporting Precious Metal Prices

One of the key reasons behind the sustained rally in both gold and silver is restricted supply. Gold mining activity has remained limited, with no major increase in production despite rising prices. Similarly, silver supply continues to lag demand growth.

Silver’s case is particularly interesting because it is not just a precious metal but also an important industrial commodity. Its usage spans multiple industries, including:

• Solar energy and renewable power

• Electrification and electric vehicles

• Electronics and industrial manufacturing

With the global push toward clean energy and electrification, silver demand is expected to remain strong in the coming years.

Gold, on the other hand, continues to benefit from its status as a safe-haven asset. Rising geopolitical tensions, global economic uncertainty, and currency volatility have increased demand for gold as a store of value.

Investors’ Growing Interest in Gold and Silver

According to Manav Modi, Commodities Analyst at Motilal Oswal Financial Services, the rally in 2025 clearly signals a shift in investor behavior. Gold is no longer viewed merely as a cyclical hedge but is increasingly being treated as a strategic reserve asset.

Several factors are supporting gold prices:

• Strong buying by central banks

• Fluctuations in global currencies

• Geopolitical instability and economic uncertainty

In India as well, investor interest has increased significantly. Assets under management (AUM) in gold and silver ETFs surged by over 150 percent in 2025, indicating strong participation from retail and institutional investors alike.

What About Base Metals?

The strong momentum in commodities was not limited to precious metals alone. Copper witnessed an impressive rally last year, with prices climbing to around $13,000 per tonne, translating into nearly 40 percent year-on-year returns.

Global demand for refined copper is expected to grow by 2.1 percent, reaching approximately 28.7 million tonnes by 2026, driven by infrastructure development and electrification. Meanwhile:

• Aluminium delivered returns of about 17 percent

• Zinc gained close to 5 percent

However, experts believe base metals may see a phase of consolidation in the near term. Select opportunities could emerge over the medium term, but price movements may remain uneven.

Should You Invest in Gold and Silver Now?

Motilal Oswal’s outlook suggests that gold and silver could remain strong in early 2026. Continued central bank buying, resilient investor demand, and limited supply growth are likely to provide ongoing support to prices.

For long-term investors, allocating a portion of the portfolio to gold and silver may help:

• Diversify risk

• Hedge against inflation and currency volatility

• Protect wealth during periods of global uncertainty

Experts advise investors to take a long-term perspective rather than chasing short-term price movements, especially after such a strong rally.

Gold Hits Record High on January 12

On January 12, gold prices climbed to a record high, supported by a weaker US dollar and a decline in US stock futures. Rising geopolitical tensions further strengthened demand for both gold and silver. Gold briefly touched levels close to $4,600 per ounce, while silver also recorded a fresh lifetime high.

Final Takeaway

The sharp fall in the gold–silver ratio reflects changing dynamics in the precious metals market. With strong demand, limited supply, and global uncertainty acting as tailwinds, both gold and silver remain attractive from a long-term investment perspective. However, investors should carefully assess their risk appetite and investment horizon before making allocation decisions.