Mounting concerns are circulating among investors as one expert is predicting a potential crash in gold and silver prices soon. While precious metals have recently reached record highs, driven by factors like a weaker US dollar, expectations of interest rate cuts, and geopolitical uncertainties, this expert suggests a significant fall could be on the horizon.
Gold has climbed 50.1% and silver 63.4% in 2025, fueled by safe-haven demand and, in silver's case, strong industrial demand and supply deficits. Some analysts believe that the "super bull run" for both metals may continue, especially with the approach of Diwali, a period of increased jeweller and retail demand. Predictions include gold potentially reaching ₹1,22,000 by Diwali and ₹1,25,000 by year-end, with silver possibly hitting ₹1,50,000 and ₹1,58,000-₹1,60,000 respectively.
Despite the bullish sentiment, skepticism remains. The expert argues that industrial demand for silver might not be sustainable and could be at risk of substitution with less expensive alternatives. History also offers a cautionary tale; silver crashed 50% during the 2008 global financial crisis. Although it rebounded to a lifetime high in 2011, it then experienced a prolonged decline. Gold, however, has generally proven its worth as a store of value.
A potential decrease in the uncertainty premium associated with safe-haven assets could negatively impact gold. Silver's valuation gap with gold is also significant, with the gold-to-silver ratio around 87, compared to a long-term average of 60. Historically, such extremes have preceded sharp rallies in silver. However, some believe silver is better positioned due to its industrial demand, which could counter any moderation in safe-haven demand. Industrial demand accounts for nearly 60% of silver's total production.
Investors should carefully consider these factors and temper their return expectations. While some analysts recommend buying gold and silver on dips, others suggest caution. The situation remains fluid, influenced by global economic uncertainties, central bank policies, and geopolitical tensions. Investors should closely monitor market developments and consult with financial advisors before making any investment decisions.
One analyst points out that silver is undervalued by nearly every metric and believes that the bull market has the potential for lasting gains. They also note that the ratio of silver to the U.S. federal debt confirms that silver is still extremely cheap.
