Gold vs silver: What should you buy this Diwali, Dhanteras?

Dhanteras, the thirteenth day in the Hindu calendar, marks the beginning of the festival of Diwali. On this day, most Indians flock to jewellery shops and showrooms to buy gold and silver jewellery and coins as a tradition. Gold and silver coins as well as gold jewellery are said to bring good fortune on Dhanteras. But looking at the current situation, when inflation is high and taking a toll on the pockets of the middle-class families, investing in gold and silver should be backed by a well-thought plan rather than momentary decision.  

There are various ways of investing in gold and silver other than holding it physically, which requires an additional cost of safeguarding it. But what should you pick this Diwali and Dhanteras: gold or silver? Here’s a guide. 

Gold vs silver 

As per traditional investment norms, both gold and silver are considered safe havens during economic and political uncertainties.  

But we see their performances in the last one year, silver has underperformed in comparison with gold. As per data from last year Dhanteras to this year, gold has gone up 6 per cent, while silver is around 17 per cent down. Silver was the worst performer among precious metals in 2022. The metal has lost more than 13 per cent since January this year due to a stronger US dollar, backed by hawkish steps the US Federal Reserve has taken to curb inflation. 

“Silver as a distinct asset class should be considered as a strategic investment allocation this festive season within a global multi-asset portfolio. The first sign that silver could rise next year is the move above 80 by the gold-silver ratio (GSR), an unsophisticated measure, which compares the price of an ounce of silver against an ounce of gold. At its simplest, the GSR tells an investor that silver looks cheap relative to gold,” said Rahul Kalantri, Vice President, Commodities, Mehta Equities Ltd. 

Silver’s future prospects 

As silver is an industrial metal and is an integral part of many green technologies, investing in silver now can be a good strategy. As many countries are rapidly moving towards a greener economy, investments in decarbonisation and electrification projects will continue to grow in the next few years.  

Besides, silver loadings are high for the electrification of electric vehicles and 5G infrastructures as well. “These new and emerging applications are offering structural support to the metal. Physical demand is expected to rise by 5 per cent in 2023. Coin and bar purchases contributed a large chunk of the volume followed by industrial demand,” Kalantri added.  

Gold and silver prices 

On the price front, overseas prices of silver may edge higher in the near-term, but may face resistance at $22.40 an ounce and above that at $27.00 an ounce. Consistent trades below $16.00 are a sign of liquidation pressure. On the domestic front, silver prices are most likely to stay above Rs 51,600, and the key upside hurdle is placed at Rs 75,000.
In contrast, the recent bearish sentiment in gold has been the direct result of market participants having genuine concern about upcoming rate hikes of 75 basis points at the final two FOMC meetings this year in November and December. The 10-year bond yields in the US crossed 4.20 per cent for the first time since 2008, thus weighing on the gold prices. 

Investments for GenZ 

Investment in bullion should be backed by proper research and studies. Many experts believe that GenZ forms an important chunk when comes to bullion investment as many are choosing to invest in gold or silver ETFs, gold or silver ETFs of mining stocks, gold bonds, digital gold, futures, and mining stocks.  

“Gen Z is surely not keen on buying physical gold, but knowledge of digital gold investments is quite narrow. It is important to educate the target market about digital gold and how it can be a beneficial investment for their future. Though still many prefer, even GenZ, to buy physical gold as a multipurpose asset over digital. The bottom line is: GenZ trusts in the future of technology and doesn’t hesitate to switch to digital, especially when backed with research,” said Purvi Shah, an individual investor and communication expert.