Silver and gold markets may be positioned for substantial gains over the next two years, with silver potentially reaching $95-100 per ounce and gold trading in the $4,900-5,100 range by 2026, according to Surendra Mehta, Secretary of the India Bullion and Jewellers Association (IBJA).

Structural Changes Drive Silver Rally

The recent surge in silver prices reflects fundamental shifts in market dynamics, particularly around supply availability and investor positioning. Mehta highlighted that lease rates have reached extraordinary levels, with some cases showing rates as high as 23-24%, indicating severely tight physical availability in the market.

A significant factor supporting the bullish outlook is the strategic shift by institutional investors away from paper instruments toward physical silver holdings. Banks and fund houses are actively reducing their exposure to paper silver and increasing their physical metal positions, potentially creating additional demand pressure on available supplies.

Recent Performance and Volatility Expectations

Silver's recent performance demonstrates the intensity of current market dynamics:

Mehta emphasized that the speed of this rally naturally leads to increased volatility, with investors potentially anticipating significant corrections of 18-20% as part of the normal price discovery process. However, he stressed that such interim pullbacks should not necessarily be interpreted as changes to the broader upward trend.

Long-term Price Projections

Looking toward 2026, Mehta's forecasts suggest potential upside for both precious metals:

For gold, Mehta anticipates near-term corrections of 9-10% but maintains a positive longer-term outlook. He noted that gold could potentially see prices moving toward the $4,900-5,100 per ounce range by 2026, representing significant appreciation from current levels.

Investment Considerations

Mehta advised investors to prepare for continued fluctuations in both metals while maintaining focus on the supportive longer-term fundamentals. The structural changes driving current price movements, including the shift toward physical holdings and tight supply conditions, are expected to persist and may support higher price levels over the investment horizon.

The combination of supply constraints, institutional repositioning, and strong physical demand could create a foundation for sustained price appreciation, though investors should remain prepared for the inherent volatility characteristic of precious metals markets.

Vedanta Group Chairman Anil Agarwal has expressed strong optimism about silver's price trajectory, stating that the current rally represents only the beginning of a broader upward trend. His comments come as silver trades at all-time high levels in both global and domestic markets, driven by robust investor interest and expanding industrial applications.

Silver Outperforms Gold with Exceptional Returns

In a social media post on platform X, Agarwal highlighted silver's remarkable performance metrics for the current year. The precious metal has demonstrated exceptional strength, significantly outpacing its more established counterpart.

According to Agarwal, this performance marks a notable shift in silver's position within the precious metals space, with the metal emerging from gold's shadow to establish itself as a standout performer.

Dual Demand Profile Drives Market Dynamics

Agarwal attributed the sustained rally to silver's unique dual demand characteristics that distinguish it from other precious metals. Unlike gold, which primarily serves investment and jewelry purposes, silver benefits from both traditional store-of-value demand and expanding industrial applications.

The industrial demand component has gained particular significance with silver's growing functional use in several key sectors:

• Solar energy applications
• Defense technologies
• Emerging technological applications
• Advanced manufacturing processes

This diversified demand base provides silver with additional support beyond conventional investment and jewelry consumption, creating multiple drivers for price appreciation.

Supply Constraints Support Price Momentum

The supply side dynamics further support Agarwal's optimistic outlook for silver prices. Supply growth has remained relatively constrained due to the metal's production characteristics. Silver is largely produced as a by-product of zinc and lead mining operations, which limits the industry's ability to respond quickly to rising demand through dedicated silver mining expansion.

This supply constraint, combined with growing demand from both investment and industrial sectors, creates favorable market conditions for sustained price appreciation. The structural nature of these supply limitations suggests that rapid production increases to meet growing demand may prove challenging.

Market Context and Industry Position

The comments gain additional relevance given Vedanta's position as India's largest silver producer through Hindustan Zinc Ltd, where silver is recovered as a by-product of zinc and lead operations. However, Agarwal focused his remarks on broader market dynamics rather than company-specific performance metrics.

Silver's current rally occurs amid global economic uncertainty and expectations of monetary easing in advanced economies, factors that typically support precious metals demand. The combination of investment demand driven by economic conditions and industrial demand from renewable energy and technology sectors creates a robust foundation for continued price strength.

By characterizing the silver story as "just beginning," Agarwal framed the current rally as being driven by structural demand factors rather than short-term market sentiment, suggesting potential for sustained price appreciation despite the inherent volatility in commodity markets.