Gold hit record real high in 2024; silver’s bull run yet to start: Report

Gold’s rally may still have legs despite hitting an all-time high in 2024, as central banks continue aggressive buying and global reserves shift away from the US dollar, according to DSP Mutual Fund’s latest Netra Report.

The report noted that central banks have been purchasing close to 1,000 tonnes of gold annually since 2022, soaking up more than 25% of global mining supply each year. DSP cautioned that the gold market lacks the depth to absorb large inflows without price disruption; even a modest 5% reallocation of global forex reserves into gold could trigger a prolonged and significant price surge.

In 2024, gold achieved a major financial milestone -- it broke past its inflation-adjusted peak from the 1980s, setting a new real (inflation-adjusted) all-time high. This makes gold not just a historical safe haven but a current outperformer, firmly cementing its position in the portfolios of central banks and institutional investors alike.

Meanwhile, silver, often referred to as “poor man’s gold,” remains significantly below its inflation-adjusted highs from 2011, raising questions about why these two precious metals have taken such divergent paths.

The recent gold rally is being driven by an unprecedented shift in global reserve management. Since 2022, central banks have been on a gold-buying spree, accumulating more than 1,000 tonnes of gold annually—more than a quarter of the yearly global mining output.

In 2024 alone, official gold purchases hit $84 billion, a figure nearly equal to all central bank gold purchases from 2000 to 2016 combined. This historic accumulation signals a strong move away from the US dollar and a reassertion of gold as the primary non-dollar reserve asset.

This "re-gold-isation" is being triggered by rising concerns about US debt sustainability, geopolitical risks, and the weaponization of the U.S. dollar through sanctions. As key economies like China reduce their exposure to US Treasuries, gold is increasingly being viewed as a neutral and resilient store of value. With global forex reserves at around $12.5 trillion and the gold market valued at approximately $23 trillion (15% of which is held in India), even a small reallocation of reserves, say 5%, toward gold could spark a further surge in prices. And there's simply not enough gold supply to meet such demand.

Silver futures

Silver, on the other hand, is telling a different story. Though it shares many of gold’s monetary and industrial traits, silver is still trading well below its inflation-adjusted peak from 2011. The current gold-to-silver ratio stands at a striking 93:1, far above the historical average of around 69:1 and drastically higher than levels seen during the Roman Empire (12:1) or the Coinage Act of 1792 (15:1). This skew suggests silver may be undervalued relative to gold.

According to valuation frameworks based on money supply and historical price ratios, silver's fair value could lie between $52 and $74 per ounce—far above current market prices. The midpoint estimate of $63 implies that silver may be due for a catch-up rally if inflation fears continue and monetary debasement broadens.

So why hasn’t silver joined gold at the top? One reason is investor psychology. Gold enjoys institutional trust and central bank demand, while silver remains more speculative, dependent on retail sentiment and industrial usage. But in previous cycles, silver has lagged gold—only to surge later, often more violently.

As central banks continue to pivot toward gold and global trust in fiat currencies weakens, silver’s moment may still be on the horizon. Investors looking for asymmetric upside might find an opportunity in silver’s underperformance.

For now, gold shines at a new real peak, while silver quietly waits its turn.