Since the beginning of 2026, the precious metals market, represented by gold and silver, has demonstrated strong performance, continuing a unilateral upward trend and becoming a focal point in global financial markets. As of January 21, the international gold price has accumulated a nearly 12% increase since the start of the year, while the international silver price has surged by over 30%.
On January 21, the spot price of international gold broke through $4,888 per ounce, once again setting a new historical record. Just the previous day (January 20), international spot silver also experienced a significant rally, reaching an intraday high of $95.88 per ounce, a record peak. Amid the rapid rise in silver, the gold-silver ratio fell below 50, hitting its lowest level in nearly 14 years.
In response, Xue Hexiang, Director of the Shenwan Futures Research Institute, stated in an interview that the gold-silver ratio may decline further. However, he noted that the silver market has entered the latter half of its cycle, characterized by stronger gains but significantly amplified volatility.
Xue emphasized that gold, as the dominant metal, always leads the price movements of silver, regardless of how the gold-silver ratio evolves. "If the trend for gold is upward, silver is highly likely to follow suit, and vice versa. It is difficult for silver to move against the trend," he pointed out. He explained that silver's recent strong performance is not only due to its shared safe-haven financial attributes with gold but also benefits from its irreplaceable industrial applications in high-end manufacturing sectors such as photovoltaics and electronics. "Silver's financial and industrial attributes are almost equally balanced," he added.
Regarding the widely watched gold-silver ratio, Xue noted that traditional views suggest the ratio exhibits "mean reversion" characteristics. However, given the current unprecedented global changes, the perspective on commodities needs to be extended. He traced back to the era of Louis XIV of France (around the mid-17th century), when the bimetallic system was in place and the gold-silver ratio was as low as 15. Thus, the recent decades' "central level around 80" for the ratio should not be considered a universal rule.
From a long-term perspective, Xue believes the gold-silver ratio exhibits a trend of gradual increase, primarily due to the growing scarcity of gold. On one hand, global annual gold production is extremely limited, while silver supply is relatively abundant. On the other hand, central banks, as major buyers, continue to primarily increase their gold holdings as foreign exchange reserves, a function that silver does not possess.
Nevertheless, shifting the focus back to 2026, Xue predicts that the gold-silver ratio may decline further this year. "Both gold and silver will rise, but silver's gains are likely to be more substantial," he stated.
He further indicated that silver has surged from over $40 per ounce in October 2025 to its current level above $90, breaking historical highs. The market has now entered the mid-to-late stage of its cycle. Historical experience shows that during this phase, silver often experiences extreme volatility—single-day gains or losses of 5% or even 10% are not uncommon—leading to potential rapid contractions or expansions in the gold-silver ratio.
"Such volatility can be described as 'stormy waves,' making silver allocation significantly more challenging for ordinary investors," Xue cautioned.
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