कनक कनक ते सौ गुनी, मादकता अधिकाय। वा खाए बौराय जग, या पाए बौराय।
Addiction of Gold is hundred times more than that of Dhatura (poppy seed).
One needs to eat poppy to get a high. But with Gold, mere possession can give you a high!
(कनक – Gold or poppy seeds)
Addiction with Gold is not new to mankind. Since 3600 BC, when Gold was first smelted, till date -- history is agog with tales of how the lure of yellow metal has fascinated humanity at large.
Let's talk Gold in the current context and make some sense with the metal.
Supply:
In CY 2025, total Global Gold Mine production is estimated to be around ~3740-3760 tonnes. This is a new all-time high production.
In CY 2024, total production was ~ 3660-3670 tonnes.
Bear in mind, prior to 2023, Gold production for quite some years was stuck around the ~3300 tonne level.
Fuelled by high gold prices, investment in mines and commissioning of new projects, supply has seen a steady increase in the last few years.
Demand:
The total demand estimate for 2025 is ~4150-4250 tonnes.
The estimated breakdown of this demand is as follows:
Usage Head | Demand (approx. in tonne) | Remarks |
Jewellery | 1500 - 1540 | India/China key mkts, volumes down, value up |
Bar & Coins | 1240 - 1270 | Strong Demand |
Gold ETFs/Funds | 800 – 820 | Record inflows, driven by geopolitical uncertainty |
Central Banks | 750 – 900 | Slower pace Vs 2024 (1086 T). But still very elevated |
Tech & Others | 320 - 340 | AI/Electronics. Pressure because of high prices |
OTC/Others | 100 – 150 | Stock changes |
Total Demand | 4150 – 4250 | Volume growth ~3-5%, but value growth is 40%+ |
This implies a net deficit of about 250-400 tonnes in 2025.
For 2026, demand is estimated to be around similar levels of ~4100-4200 tonnes. The key variable will be the ETF demand, which can swing either way depending on risk-on or risk-off sentiment. Which purely will be a function of US growth and US behaviour 😊
Gold-Silver ratio & trajectory:
1) Around Oct-Dec’24, when we gave our first call on Silver, Gold to Silver ratio was hovering around 90 times.
2) After a stupendous rally in Silver in 2025, today (as of 22nd Jan), this ratio stands at 52!
This means, one ounce of Gold trades for roughly 52 ounces of Silver!! Now, let's deep-dive into history and check this ratio through various highs & lows:
Low Ratio (Silver doing well)
1) 1979-1980: During Hunt Brothers episode, ratio plummeted to 17-18 times. Main reason was speculative frenzy & margin buying.
2) 2006-2008: Ratio hovered around 35-40 times. Prime reason was global industrial growth, Strong demand for silver from electronics, solar etc.
3) Early 2011: Levels around 30-38 times. Massive industrial demand (solar, electronics, medical, LEDs), strong inflation fear, negative real rates, heavy speculative buying in Silver ETFs.
High Ratio (Gold doing well)
1) Early 1991: Ratio around 90-100 times. Global recession in 1990s, Gulf war, economic uncertainty, Silver fell due to weak industrial demand, Gold held up well.
2) 2016: Ratio around 85 times. Classic risk-off trade, china slowdown, oil crash, global growth fears.
3) March 2020: All time high 115-125 times. Global pandemic, lockdowns, Silver was dumped because of low demand & Gold soared as safe haven.
4) 2022-2023: Ratio at 85-100 times. Rate hikes by Fed leading to high real yields, dollar strengthening, Gold held up & Silver lagged amid geopolitical risk.
History of Ratio, summarised:
Low Ratios are typically seen whenever there is euphoria around industrial usage of Silver. Every time Silver has done exceptionally well i.e. extreme low ratios, its either speculative or driven by some new-found industrial usage and relentless push around that industrial-demand story. Which is what we saw whole of 2025 and till today. We will share the complete breakdown of Silver usage in our next blog shortly.
High Gold-silver ratios are typically driven by geopolitical crisis or risk-off trades on global levels. This has also happened in times of recession or when growth seriously suffers.
To reiterate from our last blog on this topic – Gold-silver ratio throughout 21st century has been at 69 times. At current levels of 52, its far below historic averages. Clearly signifying that Silver has raced too soon too fast.
,
At Moneyfont, we tried wrapping all these points together to stitch a storyline, and it reads thus:
1) We are heading into 2026, with extreme geopolitical uncertainty.
2) West Asia, Russia-Ukraine, US ambitions in Venezuela, Chile, Panama, Greenland etc is all signalling heightened risks.
3) Any attack on Iran could send Oil flaring and inflationary pressures rising across economies – again a big positive for Gold.
4) Add to this, soaring global debt, relentless currency printing is pushing fiat to gradual irrelevance. Though this is a slow process
5) Tariff tantrums of Trump are likely to push inflation high across multiple economies and dampen growth. At the least, hurt fiscal sheets of many countries. Again +ve Gold.
6) Gold Demand is way higher than supply. Plus, Gold enjoys a steadier central bank demand.
7) Last, at a current ratio of 52, Gold looks more tempting. Though any rally in one will auto-drag the other. But still, risk-reward looks more attractive for Gold
All above are screaming Gold like never before!
What can go wrong in our Gold thesis: If the World suddenly becomes a calmer, saner place. US drops all its tariff tantrums and geopolitical shenanigans. Or the world at large sees reduced Money supply and less debt. As we stand today, all these look like a far cry.
Our final call:
We believe, at 52 times, Silver has played its due course, and only the speculative froth continues to boil the system. One has to be extremely cautious playing with this froth.
We are more comfortable with Gold at current levels, and we believe that at an ideal ratio of 70 times – Gold should be around ~6500$/Oz! (assuming Silver today at 92$/oz).
If Silver continues to soar up – Gold will have even more headroom. And if Silver were to retrace back to $80, Gold should ideally be around ~5500-5600$ levels.
Hence, by corollary, even if these commodities were to correct, we will be comfortable holding Gold, which could be a softer blow to handle!
Last word of caution:
Please beware when you are buying, and in what form are you are buying Gold. Getting in at a huge premium in the wrong ETF/Fund could be a recipe for immediate correction. Please speak to us @Moneyfront and @Ultima before investing in Gold/Silver to get the right levels and right product. (read our footnote on why this is so critical)*
Gold is a revolt -- Revolt against the system, against US hegemony, against global conflicts, against weaponization of Dollar, against ever-soaring money supply & inflation!
Yes, go buy Gold!
*Footnote on price differences
There is a huge disconnect between Comex, MCX, SHFE Gold prices, and, needless to say, the local ETFs & funds trade at a significant premium/discount over the real price.
For eg, Comex Gold (Global benchmark) today is 4822 USD. In India, the MCX price of 24K Gold is at 1,56,300-500 level per 10gms (i.e. 156 for 0.1 gms).
If we convert this to USD/Oz, then it comes to 4885$/oz. Which is a premium of ~60-70 USD/oz. This premium includes India’s 10-12% import duty, GST, etc.
And it's ludicrous, but Gold ETF closing prices varied from 125 to 145 Rs per 0.1 gm of Gold, indicating a discount to spot, on 22nd Jan.
But on 21st Jan, these ETF prices were all quoting premiums, and in one stroke of massive correction, it was all wiped off! This is a complex subject, and we shall try to write more on this at some later date.
In a nutshell, if someone who bought on 21st Jan was down 7-10% on 22nd Jan. In reality, the gold price did not correct so much. Only the premium on ETFs got taken off! Silver is worse when it comes to fair pricing. So please speak to us @Moneyfront and @Ultima before investing in Gold/Silver to get the right levels and right product.