As 2026 approaches its final months, silver is emerging as a potentially more attractive investment compared to gold, according to a recent analysis by Monarch PMS. The investment firm points to a rising gold-silver ratio and tightening physical market fundamentals as key drivers for silver's relative cheapness.
The Shifting Gold-Silver Ratio
The gold-silver ratio, which measures how many ounces of silver it takes to buy one ounce of gold, currently stands around 69x. This figure has significantly increased from a peak of 46x in January, nearing its 21st-century average. Monarch PMS uses a 60x ratio as its valuation model benchmark, suggesting that silver has recently underperformed gold, making it appear relatively undervalued.
Monarch's base case scenario, assigned a 55% probability, projects gold trading between $4,300 and $4,700 an ounce by the end of 2026. Under the same scenario, silver is forecast to reach $70-$85 an ounce. These projections assume the US Federal Reserve maintains current interest rates through September, energy prices stabilize, real yields plateau, and central banks continue their gold purchasing at approximately 250 tonnes per quarter.
Silver's Valuation and Supply Advantage
The firm's valuation model further reinforces silver's relative appeal. While gold's modelled value ranges from $3,248 to $4,595 an ounce (midpoint $3,922), silver's modelled range is $54-$77 an ounce, with a midpoint of $65. Gold's June low of $3,985 was close to its modelled midpoint, but silver, currently at $61.70, remains below its $65 midpoint, indicating a more favorable entry point.
Beyond the ratio, Monarch PMS highlights robust physical market fundamentals supporting silver. The firm anticipates a sixth consecutive annual silver deficit, with approximately 762 million ounces drawn from above-ground stocks since 2021. Meanwhile, global mine supply has remained largely flat for the past decade, exacerbating the supply-demand imbalance. The significant disparity between paper claims on COMEX and available physical inventory (roughly 5.6 times) could amplify price movements if physical demand intensifies.
Potential Risks and Bullish Scenarios
The outlook is not without risks. Monarch assigns a 20% probability to a bear case where gold could fall to $3,400-$3,900 and silver to $45-$55 an ounce. This scenario assumes the Fed raises rates in September, oil prices decline further, and weaker demand leads to a broader economic slowdown.
Conversely, a bullish scenario, with a 25% probability, could see gold soar to $5,000-$5,600 and silver to $95-$120. This outcome is contingent on labor-market weakness pushing the Fed towards easing, a drop in real yields, renewed institutional allocation to precious metals, and a return to physical tightness in the silver market.
In summary, while gold remains a traditional safe-haven asset, Monarch's analysis suggests that silver offers greater relative value as 2026 draws to a close, particularly if its ongoing supply deficit and physical market tightness continue to influence prices.