Silver’s time to shine? Gold-silver ratio screams undervaluation

Gold has officially hit an all-time high, and it’s no fluke. A perfect storm is fueling the rally: investors are moving away from the dollar—the U.S. Dollar Index is down 9.6% year to date – central banks are accumulating gold at record levels, and global geopolitical tensions remain elevated.

Gold is now the top-performing asset in 2025, recording a return of 26.7% in CY2025. Goldman Sachs forecasts the precious metal could reach $3,950 per ounce by year-end. If recession fears escalate, that projection could rise to $4,500.

But this rally isn’t happening in a vacuum. Over the past two decades, gold and silver have undergone dramatic swings. In the early 2000s, prices were modest. Then came the 2008 financial crisis, prompting a surge in safe-haven demand. Gold climbed steadily, averaging over 10% in annual returns. Silver, while more volatile, followed suit.

So far in 2025, silver has gained about 8.9%, reaching $32.30 per ounce. Its strength isn’t purely speculative – industrial demand from green technologies, such as solar panels and electric vehicles, has fueled real momentum. Limited supply has added further support.

Silver’s still cheap – and the gold-silver ratio proves it

As of April, the gold-to-silver price ratio stood at 106.9:1, significantly above the historical average of 70 to 80. This ratio, which compares the price of one ounce of gold to one ounce of silver, is a long-standing measure of relative value between the two metals.

During crises, like the COVID-19 pandemic in 2020, the ratio spiked above 110, reinforcing gold’s role as a safe haven. Historically, however, the ratio tends to revert to its mean. With silver still trailing gold, analysts suggest it may be undervalued, offering potential upside for investors.

Fundamentals supporting silver’s case

Several market drivers are underpinning the bullish outlook for silver:

• Rising industrial demand, especially in EVs, 5G infrastructure, and solar energy.

• Supply shortages, as mine production struggles to keep pace with global needs.

• Geopolitical tensions are driving safe-haven inflows into both gold and silver.

What comes next?

If the gold-silver ratio continues its historical pattern of mean reversion, silver may have room to run, or gold could retrace some gains. While timing the exact inflection point is difficult, the current widespread sentiment suggests an opportunity for long-term investors focused on relative value.

As always, traders should consider broader macroeconomic factors, geopolitical events, and industrial trends when interpreting these signals.

From tola to treasure: gold and silver sparkle in Pakistan

In Pakistan, gold and silver prices have surged by 34.6% and 8.9%, respectively, since the start of the year. Gold rose from approximately PKR 280,000 per tola in Dec-24 to a record PKR 379,000 in April. Silver increased from about PKR 236 per tola to PKR 260.

Apart from a weakening Pakistani rupee, both gold and silver have benefited from concerns around global conflicts, high interest rates in Western economies, and reduced confidence in fiat currencies, making precious metals a hedge against economic instability in the local context.