Where next for the gold:silver ratio?

Analysis of the Rising Gold:Silver Ratio and Silver's Underperformance

• Recent price trends and market dynamics
  • Silver underperformed gold as gold held support near $4,000/oz while silver fell into the low $50s, pushing the gold:silver ratio above 76 (p. 1).
  • Gold slipped toward $4,020/oz post-Fed meeting, and CME silver net managed money long positions dropped to 17Moz, the lowest level since February 2024 (p. 1).
• Macroeconomic and geopolitical drivers
  • Oil price concerns from the Iran conflict increased expectations of tighter central bank monetary policy (p. 1).
  • Markets are pricing an 80% probability of a 25bp Fed rate hike in December 2026, alongside at least two additional hikes in 2027 (p. 1).
  • Gold received ongoing support from official sector purchases and safe-haven buying, whereas silver lacked quasi-monetary backing and suffered due to its high beta (p. 1, p. 3).

Supply, Liquidity, and Demand Factors in the Silver Market

• Easing physical tightness and vault inventory growth
  • London vault inventories rose to a near four-year high of 932Moz by end-September 2026, with non-ETP free-float stocks reaching ~267Moz (p. 3).
  • Silver ETP holdings decreased by roughly 60Moz year-to-date, releasing physical liquidity back into the market (p. 3).
• Weakening retail and international physical demand
  • Mints' primary silver bullion coin sales plunged by over 80% q/q in Q2 2026 to their lowest quarterly level since 2010, remaining down 22% y/y in Q3 (p. 3, p. 5).
  • Indian import restrictions imposed in May eased London liquidity; newly issued Indian import licences exceeding 10,000t are unlikely to be fully utilized due to weak domestic demand (p. 5).

Future Outlook for Silver and Key PGM Developments

• Market balance and price projections
  • Industrial thrifting in photovoltaics and high prices weighing on jewellery consumption are narrowing the silver deficit, with a return to market surplus expected next year (p. 5).
  • Silver is likely to underperform near-term due to interest rate headwinds, but could outperform once markets scale back expectations for 2027 monetary tightening (p. 5).
• Recent updates on platinum and palladium
  • Valterra Platinum's Q3 2026 refined PGM production dropped 41% y/y to 577koz due to rescheduled processing maintenance (p. 1).
  • Palladium three-month lease rates dropped below 2%, marking their lowest level since November 2024 (p. 1).