“Gold on crack”: why silver is set to soar

To like silver, first you must love gold. One of HSBC’s gold traders once described silver as “gold on crack”. It sums it up beautifully. Silver is highly correlated with gold, around 80%, which means the two metals generally move in sync. But silver has a “beta” of 1.4 times compared with gold – in other words, it is 1.4 times more volatile. That means silver wins on the way up and causes mayhem on the way down.

The key chart to keep in mind is the gold-to-silver ratio (GSR). An ounce of gold currently buys 66 ounces of silver. In 2020, at the depths of the Covid crash, the gold-to-silver ratio touched 124, the cheapest recorded price in history. That was $12 an ounce of silver, when gold was $1,486; hence a gold-to-silver ratio of 124.

The lowest gold-to-silver ratio in recent years, at 46, occurred on 27 January 2026, the day before prices peaked. Gold managed $5,417 per ounce while silver hit $117, the highest prices in history. A smart investor who bought precious metals at the gold-to-silver ratio high would have made 264% in gold, and a whopping 874% in silver.

The average gold-to-silver ratio over 30 years has been 68. When the gold-to-silver ratio is above average, then a patient investor is very likely to win and outperform gold at some point in the future. By contrast, a gold-to-silver ratio below average may lead to disappointment. With the current gold-to-silver ratio at 64, the reason to hold silver, as my clients at ByteTree do, is because I am bullish on gold.

After all, the gold-to-silver ratio touched 33 in 2011, on the back of a gold surge and a solar boom. If that happened again, silver would double versus gold. Better yet, in 1699, Sir Isaac Newton was the Master of the Royal Mint. At that stage, the gold-to-silver ratio was 15.2. With that kind of gravity, silver would need to quadruple compared with gold. You can see what drives the bulls.

From cutlery to cutting edge: where silver shines

From 1816, gold became the monetary standard, while silver remained in use for smaller transactions. It was also popular in jewellery and tableware. But as technology advanced, demand for silver grew with new applications owing to its extreme qualities.

First, there was photography, because silver halide salts darken when light hits them. Demand in this field peaked in 1999 at around 228 million ounces and has been in decline since. Silver lost out as digital photography blossomed, but surprisingly, photography still accounts for 24 million ounces per year.

Photovoltaic silver demand has also been significant, and was a key driver of the 2011 boom. At that time, demand growth was exponential, but manufacturers soon found ways to consume less silver, using thinner layers and switching to copper electroplating. As the saying goes in commodities, the best cure for high prices is high prices. Substitution kicked in, and despite record PV installation, demand has been falling since 2024.

Yet there are other uses well. Silver is the best electrical and thermal conductor among metals and is the most reflective metal in visible light. It is found in telescope mirrors and in advanced electronic circuitry. It is also malleable and can be beaten thinner than paper.

Silver disrupts bacteria and kills microbes. In times past, people would store their water and wine in silver jugs, not just because they looked nice, but because they were hygienic. Today, silver is used in filters and wound dressings, which are popular with the armed forces. In that sense, silver is part industrial metal and part precious metal, which explains why its price behaviour combines the monetary properties of gold with the industrial demand of copper.

Despite falling demand from photography and solar applications, the market remains in deficit of approximately 46 million ounces, according to the Silver Institute, having peaked in 2022 at 254 million ounces. Higher prices have motivated the producers, but not overly so, as silver is generally a by-product of mining other metals.

Is silver better than gold as an investment?

The real driver stems from investor demand. While the central banks accumulate gold during times of uncertainty, the public looks to silver. It has more upside, and people can afford to buy more of it. ByteTree’s clients have held silver since 2019, topping up in 2020. We trimmed last October, and again in January and March. I turned bullish again in August as the correction appeared to be over. We hold the iShares Physical Silver ETC (LSE: SSLN), an exchange-traded fund tracking the spot price.

I reiterate that an investment in silver is a means of expressing a bullish view on gold, which remains a long-term hold in our portfolios. We also own gold-mining shares, which have a beta of 1.9 in relation to gold, making them even more sensitive than silver. In the post-January 2026 correction, silver lagged the miners significantly.

Gold is down 20% since the January 2026 high. The gold miners are down just 13% and silver 43%. On that basis, silver has been beaten down the most, but has turned the corner. I like them all, but one senses that as the gold bull market resumes, silver will have the most to give.

But with bitcoin now available in the UK as an ETF, and now on Hargreaves Lansdown, don’t dismiss that opportunity either. Bitcoin is down 37% from its high last October and is responsive to similar macroeconomic arguments. The next bull cycle looks promising, especially from these levels.

As I mentioned in MoneyWeek two weeks ago, I created the BOLD Index, which combines bitcoin and gold on a risk-weighted basis. The 21Shares Bitcoin Gold ETP (LSE: BOLD) gives you the best of both worlds. BOLD is less than half as volatile as silver, and marginally less volatile than gold.

This article was first published in MoneyWeek’s magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.