Amidst escalating global macroeconomic and geopolitical uncertainties, Motilal Oswal Financial Services (MOFSL) is suggesting a shift in investment strategy, favoring gold over silver in the near term. This recommendation comes after silver's remarkable rally over the past year.
Silver's Surge and the Case for Gold
Silver has delivered an exceptional performance, with a surge of over 200% in the last 12 months, significantly outperforming gold's approximate 80% rise. As of January 23, 2026, silver reached $98.79 per ounce, a 214.4% increase year-over-year, while gold traded around $4,956.06 per ounce, reflecting a 78.91% increase. This has compressed the gold-silver ratio, which measures the relative value of the two metals, from pandemic-era highs near 127 to approximately 50. Historically, the gold-silver ratio tends to average closer to 70, suggesting silver's "catch-up" phase has largely played out.
MOFSL believes that at current levels, the probability of portfolio rebalancing by larger investors has increased due to silver’s price surge. While remaining positive on precious metals in the long term, the brokerage now favors gold for its perceived stability amid rising global instability.
Investor Flows and Market Sentiment
Investor flows into exchange-traded funds (ETFs) reflect this evolving sentiment. Since the beginning of 2026, global silver ETFs have seen outflows, even with elevated prices. Conversely, gold ETFs have consistently attracted steady inflows. This rotation indicates a move away from higher-beta assets towards traditional safe-haven assets, driven by increasing global unease. Factors contributing to this unease include heightened tensions involving the US, Iran, and Venezuela, broader Middle Eastern risks, the lingering impact of tariffs, and concerns surrounding a potential US government shutdown.
Volatility and Risk Management
Silver's increased volatility and wider daily price swings contrast with gold's more stable trading trend, enhancing gold's appeal for risk-managed portfolios. MOFSL suggests a rebalancing strategy aimed at improving stability and risk-adjusted returns within precious metals portfolios, with a 75% allocation to gold and 25% to silver.
Long-Term Outlook and Price Targets
Despite the near-term preference for gold, MOFSL maintains a positive long-term outlook on silver. Navneet Damani, Head of Research, Commodities at Motilal Oswal Financial Services, believes that 2026 will not see a one-way rally in gold and silver prices, but remains bullish on these commodities. Damani suggests investors allocate 15% of their portfolio to precious metals, with a larger portion to gold. MOFSL expects silver to potentially reach $90 or $95, translating to around ₹3,23,000-3,30,000 on the domestic front, while gold could reach $4750, followed by $5000 in 2026. For MCX, ₹1,21,500 or 1,55,000 could be the upside potential target for gold.
Investment Options
For investors looking to gain exposure to precious metals, MOFSL suggests considering ETFs, citing their high correlation to underlying prices and the savings on GST and storage costs. Motilal Oswal also offers the "Gold and Silver ETFs Fund of Funds," with both direct and regular plans.
