Commodities Insight: ‘Gold’en Ratio Reset — After Silver’s 200% Rally, Gold Looks Better Placed for the Next Move by Motilal Oswal Financial Services Ltd.
Motilal Oswal Financial Services Ltd. (MOFSL), in its latest Commodities Insight report titled ‘Gold’en Ratio Reset’, highlights that silver has delivered an exceptional rally of over 200% in the last 12 months, sharply outperforming gold’s 80%
rise—making silver one of the strongest-performing assets globally.
MOFSL notes that this sharp outperformance has led to a significant compression in the gold–silver ratio, which has fallen from pandemic highs of 127 to around 50 at the start of 2026. This reset suggests that while the long-term outlook for precious metals remains constructive, the near-term risk-reward equation may now be shifting in favour of gold after silver’s outsized run.
Commenting on the report’s key message, Navneet Damani, Head of Research Commodities and Manav Modi, Commodities Analyst, Motilal Oswal Financial Services Ltd., said:
“Silver has delivered sharp outperformance in a short span, and with the gold–silver ratio
now near lower levels, the near-term risk-reward is turning more favourable for gold. While we remain positive on both metals and silver continues to have long-term upside backed by industrial demand and tight physical market conditions, the recent rally has also increased near-term volatility. In this phase, a higher allocation to gold can help manage fluctuations while staying invested in precious metals.”
Why MOFSL is Recommending a Rebalance
MOFSL emphasises that the view is not a negative call on silver, but a risk-managed reallocation strategy after an aggressive up move. The report highlights that silver has become more volatile with sharper price swings, while gold continues to offer relatively better stability—making it a preferred near-term hedge in uncertain market conditions. The report also notes that after capturing a major move—from RS.60,000 to RS.3,20,000—a phase of consolidation or rebalancing by market participants becomes more likely at elevated levels.
Flows & Macro Trends Add Support to Gold
MOFSL points out that despite strong price action, global silver ETFs have seen outflows of over 3 million ounces since the start of 2026, while gold ETFs have witnessed comparatively steadier inflows, reflecting investor preference for more defensive positioning.
The report adds that a supportive macro backdrop is emerging as global liquidity expands. It cites U.S. M2 money supply near $22 trillion and China’s M2 above ¥340 trillion, with China’s money supply growing at over 8% YoY—a combination that historically strengthens
demand for safe-haven assets like gold.
Physical Tightness Remains, But Silver’s Near-Term Trade Looks Crowded
MOFSL notes that physical tightness in silver continues, with Shanghai trading at $10–11 above COMEX and MCX maintaining a premium of over 10%, reflecting inventory pressure in the system. However, given how sharply prices have already moved, the report indicates
that gold may now offer a more balanced entry point for investors seeking stability.
Portfolio Allocation Shift
As per MOFSL’s scenario-based illustration (Scenario 2: Rebalancing Strategy), the report outlines a revised precious metals allocation framework that shifts the portfolio tilt towards stability and better risk-adjusted returns. The suggested split recommends 75% allocation to gold and 25% to silver, indicating a preference for gold as a relatively steadier hedge in the current environment, while still retaining meaningful exposure to silver’s long-term structural upside. MOFSL notes that after silver’s sharp outperformance and heightened volatility, such a rebalancing approach can help investors manage fluctuations more effectively, without exiting the precious metals theme. This allocation strategy aims to maintain participation in the broader upcycle while improving portfolio resilience during near-term price swings.
Summarising the report, Navneet Damani, Head – Research (Commodities) and Manav Modi, Commodities Analyst (Bullions), Motilal Oswal Financial Services Ltd., added:
Going forward, we believe investors can benefit from a rebalanced precious metals strategy—retaining silver as a long-term structural theme, while increasing gold allocation to manage near-term volatility and capture a potentially stronger risk-adjusted opportunity in the next phase of the cycle.”
For More Research Reports : Click Here
For More Motilal Oswal Securities Ltd Disclaimer
http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html
SEBI Registration number is INH000000412
