Much has been made of the galloping price of gold over 2025 so far. But so too has the price of its precious metals sibling, silver.
Gold has indeed had a standout year, rising from just over US$2,600 per ounce to a new record high of just over US$3,500 by late April. Since then, the yellow metal has treaded water, but it still sits at a rosy US$3,340 per ounce at the time of writing on Friday. That's a good 28.5% higher than where it was just six-and-a-half months ago.
But the silver price has been no slouch. The metal began this year at just over US$29 an ounce. Today, that same ounce will set an investor back US$38.42 (at the time of writing on Friday). And that's after silver nearly got to US$40 just a few days ago.
Sure, gold's 2025 highs are more impressive, seeing as they are of the 'record' nature. But even so, the last time we saw silver at close to US$40 an ounce was back in mid-2011. That means the metal is at a 14-year high as we speak. As well as up just over 32% year-to-date.
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Will gold outperform silver in 2025?
After seeing this, many investors might be wondering whether silver will continue to outshine gold over the rest of 2025.
Well, that's obviously a difficult question to answer, as commodity markets are very difficult to make predictions on.
But let's discuss a few important considerations.
Firstly, the demand curves for gold and silver are driven by different factors. Gold is actually a commodity with very few industrial uses. Approximately 10% of processed gold goes into industrial applications in any given year. The rest is used for either jewellery or investment purposes.
In contrast, silver is an important industrial metal, with uses ranging from car components and batteries to circuit boards, solar panels, and medical devices.
As a consequence of this, the silver price is often far more sensitive to the economic cycle than that of gold.
In addition, although viewed as a legitimate asset for investment purposes, silver doesn't quite have the same 'safe haven' appeal as gold does, probably due to its increased abundance and cheaper price.
In this light, I would expect the chances of silver continuing to outshine gold to be dependent on whether the global economy continues to be in good health over the rest of the year.
The gold-silver ratio is clear
However, there is one metric that also indicates that silver might be able to continue to outperform gold. It's called the gold-silver ratio.
The gold-silver ratio is a metric that is often bandied about amongst precious metals investors. Put simply, it measures how many ounces of silver one ounce of gold is able to purchase at any given point.
According to goldprice.org, the current ratio at the time of writing on Friday sits at 87.4 (meaning one ounce of gold can be exchanged for 87.4 ounces of silver at current prices).
Although that's not the highest we've seen this ratio this year, it is well above longer-term averages. To illustrate, the highest point it's been in the last 30 years is 125.9, while its lowest ratio was just 31.64.
This ratio has also spent the vast majority of the past 30 years under 87, and is well above the average.
This could be an indication that silver remains undervalued compared to gold. That, in turn, lends credence to the idea that silver prices could fare better than gold going forward.
Foolish Takeaway
Of course, these are just educated guesses. Anything is possible on the markets, particularly the commodity markets. Let's wait and see which precious metal comes out on top for 2025.
