Gold-Silver Ratio Sinks Below 56: A Shift in Investor Preferences

Gold-Silver Ratio Falls to 55.62 as War in West Asia Escalates

The gold-silver ratio (GSR) has plummeted by 7.5 points to 55.62 in just one month as the war in West Asia intensifies, maintaining high oil prices and a strong dollar. In response to the Indian Government's decision to impose a 15 percent duty hike on precious metals on May 13, domestic bullion experienced a sharp surge. However, this rally was short-lived, and silver and gold emerged as the biggest losers on the Multi Commodity Exchange (MCX) just two sessions later as traders booked profits, further compressing the ratio.

As of May 15, silver futures for July delivery were trading 6.82 percent lower at Rs 2,71,259 per kilogram, while the gold contract for June was trading 1.93 percent lower at Rs 1,58,850 per 10 grams (as of 15:15 IST). Silver had surged above Rs 3 lakh per kg after the duty announcement but collapsed by nearly Rs 20,000 from its peak in just two sessions.

According to commodity analysts, the current GSR near 56 indicates that silver is outperforming gold. Nirpendra Yadav, Senior Research Analyst at Bonanza, notes that a falling ratio near 56 suggests that silver momentum remains stronger than gold, supported by industrial demand and speculative flows. The market is shifting from a defensive gold phase toward a higher-beta precious metals phase, with silver entering a more volatile stage characterized by sharper rallies and deeper pullbacks when the ratio compresses toward the 50-55 range.

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There is also a risk of profit-booking at current levels. Following a sharp rise on Thursday, prices of precious metals declined sharply on MCX, wiping nearly all of their gains from the previous two sessions. Silver shed Rs 19,843, and gold lost Rs 3,128 during intraday trade on May 14, further compressing the ratio.

The gold-silver ratio stood just above 63 on April 1, 2026, a month after the war in West Asia. When bullion peaked at record levels toward the end of January this year, the GSR stood below 50. Renisha Chainani, Head of Research at Augmont, estimates that the probability of short-term profit-booking on silver is elevated. She notes that silver has significantly outperformed recently, and such fast ratio compression often leads to sharp corrections because silver is much more volatile than gold.

For retail investors, Chainani advises that as the gold-silver ratio nears 56, both metals are in a historically balanced range, neither dramatically cheap nor expensive relative to the other. A split allocation of roughly 3:1 or 4:1 in favor of gold by value is a common starting point. However, she cautions that silver offers higher leverage in a bull run but also far greater downside volatility. For retail investors, systematic accumulation via digital silver or SIPs in silver ETFs, rather than lump-sum physical buying at current elevated prices, is the more prudent path.

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The gold-silver ratio can be calculated using the following formula:

Price of 10 gm of gold ÷ Price of 10 gm of silver

Gold-silver ratio = 1,61,978 ÷ 2,911.90

Gold-silver ratio = 55.62