Gold is set to outpace silver, according to Goldman Sachs, thanks to an increase in central bank purchases and shifting market dynamics. Central banks are reframing the historical gold-silver price ratio, driven by geopolitical factors.

Change in Gold Silver Dynamics

Typically, the gold-silver ratio oscillates between 45 and 80, but recent geopolitical tensions have disrupted this relationship. Central banks ramped up their gold acquisitions as a safeguard against increasing currency risks.

Goldman strategists foresee no recovery for silver in tandem with gold’s rising momentum. They characterize this divergence as structural, not temporary.

Gold’s status as a monetary reserve asset strengthens its market position, particularly as geopolitical concerns rise, positioning it as a more valuable asset compared to silver.

Industrial Challenges for Silver

While silver saw temporary gains from China’s solar energy demand, overproduction has dampened its outlook. In comparison, rising recession fears and ongoing central bank acquisitions bolster gold’s forecast:

• Base Case: $3,700/toz by end of 2025
• Mid-2026 Target: $4,000/toz
• Bull Case: $4,500/toz if ETF inflows heighten

The current market environment represents a strategic entry point for long-term gold investments, as economic fluctuations continue into 2025.