Iran war: 3 reasons silver can’t act as a portfolio diversifier like gold
Fook said silver does not have as established a track record as a safe haven asset compared to gold. He said the gold standard act as the basis for the international monetary system at various points in history.
- Mar 4, 2026,
- Updated Mar 4, 2026 12:25 PM IST
Hou Wey Fook, Chief Investment Officer at DBS Bank in a fresh note said he does not subscribe to the notion that silver can act as a substitute for gold as a portfolio risk diversifier for three reasons.
Fook noted that silver has a large proportion, nearly 60 per cent, of its demand from industrial applications. This exposure to industrial demand makes silver susceptible to price corrections during periods of economic weakness, he noted.
"In comparison, gold only has c.10 per cent of demand tied to industrial demand and accordingly will remain more resilient during economic downturns," Fook said.
Additionally, Fook noted that silver has a smaller market size o $5 trillion compared with gold's $36 trillion.
If one limits it to just the investment portion of the market, silver becomes even smaller relative to gold, he said.
"This market size disparity makes silver more susceptible to speculative and retail flows; case in point, silver saw more extreme price swings compared to gold during the market rout earlier this year. Silver saw an intra-day drop of over 30 per cent on January 30 while gold capped its decline at 9 per cent. This volatility makes silver less conducive as a risk diversifier," he said.
Lastly, Fook said silver does not have as established a track record as a safe haven asset compared to gold. He said the gold standard act as the basis for the international monetary system at various points in history. Furthermore, sovereign institutions such as central banks have been including gold as part of their reserves for centuries.
"Silver does not enjoy the same status as a store of value compared to gold," he said.
On Wednesday, silver futures for May 5 delivery were trading 2.2 per cent higher at Rs 2,71,200 per kg. Gold, on the other hand, was quoting 1.13 per cent higher at Rs 1,62,931 per 10 grams.
Fook said the ongoing strength in global gold prices reflects increasingly sticky hedging demand amid chronic geopolitical uncertainty, reinforced by conflict risk, de-dollarisation, and continued central bank and investor diversification.
Since the beginning of Trump’s second term, his recurrent use of military force and threats has conditioned the market to price in more durable and persistent geopolitical risk premiums for gold, Fook said adding that the latest Iran war will only further cement that narrative.
"The war will also revive themes like de-dollarisation and encourage investors to diversify away from the dollar and dollardenominated assets. The trend of central bank reserve diversification (through gold buying) will likely continue, and high net-worth/retail investor demand for gold will also increase as the need for geopolitical and dollar hedges grows strong," he said.
Hou Wey Fook, Chief Investment Officer at DBS Bank in a fresh note said he does not subscribe to the notion that silver can act as a substitute for gold as a portfolio risk diversifier for three reasons.
Fook noted that silver has a large proportion, nearly 60 per cent, of its demand from industrial applications. This exposure to industrial demand makes silver susceptible to price corrections during periods of economic weakness, he noted.
"In comparison, gold only has c.10 per cent of demand tied to industrial demand and accordingly will remain more resilient during economic downturns," Fook said.
Additionally, Fook noted that silver has a smaller market size o $5 trillion compared with gold's $36 trillion.
If one limits it to just the investment portion of the market, silver becomes even smaller relative to gold, he said.
"This market size disparity makes silver more susceptible to speculative and retail flows; case in point, silver saw more extreme price swings compared to gold during the market rout earlier this year. Silver saw an intra-day drop of over 30 per cent on January 30 while gold capped its decline at 9 per cent. This volatility makes silver less conducive as a risk diversifier," he said.
Lastly, Fook said silver does not have as established a track record as a safe haven asset compared to gold. He said the gold standard act as the basis for the international monetary system at various points in history. Furthermore, sovereign institutions such as central banks have been including gold as part of their reserves for centuries.
"Silver does not enjoy the same status as a store of value compared to gold," he said.
On Wednesday, silver futures for May 5 delivery were trading 2.2 per cent higher at Rs 2,71,200 per kg. Gold, on the other hand, was quoting 1.13 per cent higher at Rs 1,62,931 per 10 grams.
Fook said the ongoing strength in global gold prices reflects increasingly sticky hedging demand amid chronic geopolitical uncertainty, reinforced by conflict risk, de-dollarisation, and continued central bank and investor diversification.
Since the beginning of Trump’s second term, his recurrent use of military force and threats has conditioned the market to price in more durable and persistent geopolitical risk premiums for gold, Fook said adding that the latest Iran war will only further cement that narrative.
"The war will also revive themes like de-dollarisation and encourage investors to diversify away from the dollar and dollardenominated assets. The trend of central bank reserve diversification (through gold buying) will likely continue, and high net-worth/retail investor demand for gold will also increase as the need for geopolitical and dollar hedges grows strong," he said.