NEW DELHI, India — Investors should consider booking profits in silver and reallocating funds toward diversified Indian equity investments or blue-chip stocks, as the recent rally in the precious metal appears increasingly stretched, according to a new report released Thursday.
In a note to investors, WhiteOak Capital Mutual Fund said allocations to precious metals should be trimmed back to safe-haven levels, cautioning against chasing further upside in silver.
“Book profits on silver, as its current valuation is the most over-extended relative to historical periods. Trim precious metals back to a safe haven level in your total portfolio,” the report said.
The fund house warned that silver’s sharp outperformance compared with gold often marks the final speculative phase of a rally, leaving prices vulnerable to a sudden correction.
“When silver outperforms gold with high velocity or parabolic moves, it often signals the final, speculative stage of a run; one that historically ends against investors’ best interests,” the asset manager said.
According to the report, the Gold-to-Silver Ratio has fallen to about 46:1, well below its 10-year average of roughly 80:1. The ratio is used to gauge the relative valuation of the two metals.
“When it drops below 50:1, silver is no longer cheap. In previous cycles, a ratio this low has preceded a mean reversion where silver prices corrected significantly faster relative to gold,” the fund said.
The report also pushed back against the argument that a weakening rupee justifies heavy exposure to precious metals, noting that currency depreciation has not historically protected investors from sharp speculative reversals.
“An ounce of gold or silver produces no cash flow. In contrast, the Nifty 50 companies reinvest profits to grow, and reward investors by returning cash (in the form of dividends), as well as through capital appreciation,” the fund house said.
Since inception, the Nifty 50 Total Return Index has matched or exceeded gold’s compound annual growth rate of about 13.2 percent, while offering far greater liquidity than physical precious metals, the report added. (Source: IANS)
