Silver Prices Soar to Record Highs: Motilal Oswal shares 3 smart profit-booking tips

Motilal Oswal Financial Services Ltd (MOFSL) said investors may adopt structured portfolio strategies in gold and silver as the sharp rally in silver over the past year has changed relative valuations within precious metals.

In its commodities insight note ‘Gold’en Ratio Reset’, MOFSL highlighted that silver has risen by over 200 per cent in the last 12 months, significantly outperforming gold, which has gained around 80 per cent during the same period. This divergence has compressed the gold–silver ratio from pandemic highs of around 127 to nearly 50 at the start of 2026.

According to MOFSL, such phases typically require investors to focus on portfolio management rather than directional positioning. The brokerage outlined three broad investor strategies — partial profit booking, portfolio rebalancing, and staggered investment — to manage gains, volatility and allocation risks.

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Partial profit booking while staying invested

MOFSL said investors who entered silver at much lower levels and have seen substantial appreciation may consider partial profit booking as a risk-management strategy.

The brokerage explained that booking a portion of profits allows investors to lock in gains while retaining their original capital in precious metals.

“After strong rallies, partial profit booking helps reduce portfolio risk without exiting the asset entirely,” MOFSL said.

The brokerage said such an approach is relevant in silver, which has delivered multi-fold returns in a short period. By booking profits gradually, investors can reduce exposure to sharp price swings while maintaining long-term participation in the asset class.

MOFSL added that long-term investors commonly use partial profit booking to manage volatility during phases of extended price appreciation.

Rebalancing allocation between gold and silver

MOFSL said another key strategy is rebalancing portfolio weightages between gold and silver. It noted that the gold–silver ratio has a long-term average near 70, while current levels around 50 are historically low.

“The current level of the gold–silver ratio suggests that silver has already outperformed meaningfully,” MOFSL said.

The brokerage said that in such conditions, investors often increase gold allocation relative to silver to manage volatility. It clarified that this does not reflect a negative view on silver, but is based on relative valuation and risk–reward considerations.

MOFSL highlighted that gold typically shows lower volatility and more stable price trends, while silver tends to exhibit higher beta and wider price swings. Increasing gold weight can therefore help smooth overall portfolio performance during uncertain market conditions.

The report also pointed to fund flow data, noting that global silver ETFs have seen outflows of over 3 million ounces since the start of 2026, while gold ETFs have continued to record steadier inflows.

“This indicates a gradual shift from higher-risk exposure towards defensive allocation,” MOFSL said.

Staggered or gradual investment approach

MOFSL also highlighted staggered investment as a strategy for investors deploying fresh capital into precious metals. The brokerage said investing in phases rather than at a single price level helps manage volatility and reduces timing risk.

“Staggered investment allows investors to buy during dips and manage price fluctuations more effectively,” MOFSL said.

The brokerage said this approach is particularly relevant in the current environment of rising global liquidity and macro uncertainty. It noted that the US M2 money supply is near $22 trillion, while China’s M2 has crossed approximately ¥340 trillion, growing at over 8 per cent year-on-year.

MOFSL said excess liquidity often increases market volatility and demand for inflation hedges, making phased investment more suitable than lump-sum deployment.

The report also cited geopolitical tensions, including unrest in the Middle East, tariff-related uncertainties and concerns around a US shutdown, as factors contributing to market instability.

MOFSL reiterated that its long-term view remains positive on both gold and silver. However, it said near-term portfolio construction may focus more on risk management through partial profit booking, rebalancing and staggered investment.

“We are not changing our stance on precious metals, but suggesting rebalancing of weightages,” MOFSL said.

The brokerage added that after capturing silver’s move from around Rs 60,000 to Rs 3,20,000, portfolio rebalancing by larger investors is increasingly likely at current levels.