Why is silver rallying now? Ajay Bagga breaks down key drivers for investors

In a recent discussion, market expert Ajay Bagga shared his views in conversation with Zee Business Managing Editor, and market expert Anil Singhvi shared sharp insights into US President Donald Trump’s actions on the global stage, the real impact of US tariffs, and the ongoing rally in gold and silver prices.

The discussion touched upon geopolitics, economics, and commodities, explaining complex issues.

Gold fresh time high at Rs 1,50,008, silver at Rs 3,27,101

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Gold and silver prices continue to surge amid a strong rally in precious metals. Gold has hit a fresh lifetime high of Rs 1,50,008 per 10 grams and is currently trading at Rs 1,49,550, marking a 2.69 per cent rise in the session.

Silver has also scaled a new all-time high, touching Rs 3,27,101 per kg. The white metal is presently trading at Rs 3,26,793, up 5.32 per cent on the day, reflecting robust investor demand and strong momentum in the precious metals market.

Trump, Norway and the Nobel Peace Prize

Ajay Bagga referred to reports that Trump had written a letter to Norway’s leadership, expressing strong displeasure over not being awarded the Nobel Peace Prize. According to Bagga, Trump has taken the issue “very personally” and even linked his future approach towards global peace to it. While the exchange had a lighter tone at times, Bagga pointed out that such communication is unprecedented and reflects how seriously Trump views symbolic global recognition.

Focus on Trump’s Davos speech

Looking ahead, Bagga said markets and policymakers are closely watching Trump’s upcoming speech at the World Economic Forum in Davos. “Last year, even through a video address, his comments caused significant disruption. This time, his words could again have an impact on global markets and Europe-US relations,” he noted.

The real cost of US tariffs

A major part of the discussion focused on US trade tariffs and their real burden. Bagga cited a detailed research study by a German economic institute that analysed nearly 25 crore transactions involving about $4 trillion worth of traded goods between January 2024 and November 2025. The findings were revealing. “Only about 4 per cent of the tariff cost was absorbed by exporters, while 96 per cent of the burden was passed on to American consumers,” Bagga said.

In simple terms, tariffs that were projected as a way to extract money from countries like China, India or Mexico have effectively become a consumption tax on Americans themselves. Anil Singhvi explained this with an example, saying if a product earlier sold for $100 and a tariff pushed the price to $135 or $140, the extra cost is ultimately paid by the US consumer at the checkout counter.

Bagga added that around $200 billion collected as customs duty has largely been paid by American households. “This has helped reduce the fiscal deficit, but it is a hidden tax. Unlike progressive income tax, consumption taxes hurt everyone equally, including poorer households,” he said. Such taxes, he warned, can eventually reduce purchasing power and raise recession risks.

Why is the US Economy is still holding up?

Despite this, the US economy has remained resilient. Bagga attributed this partly to massive investments in artificial intelligence and data centres, with $400–500 billion flowing into the sector. “This AI-led capital expenditure has supported growth even as tariffs added pressure,” he explained.

Gold and Silver: Can prices cool off?

The discussion then shifted to precious metals, a topic close to investors’ hearts. Anil Singhvi asked when ordinary investors might be able to buy gold and silver at more reasonable prices. Bagga said it is difficult to predict tops in such rallies, drawing parallels with earlier bull cycles in 1980, 2004 and 2012.

However, he shared a portfolio perspective discussed at a recent bullion seminar. “If you hold around 15 per cent of your portfolio in precious metals, about 10 per cent of that should be silver,” Bagga said. He described silver as “gold on steroids”, explaining that while gold usually leads a bull market, silver often catches up sharply later.

What is driving silver demand?

Bagga highlighted strong structural demand for silver driven by mega trends such as electric vehicles, renewable energy and data centres. Silver is used in EV batteries, solar panel coatings and advanced electronics powering AI infrastructure. “Demand-supply dynamics are tight, and that is why silver prices are moving so fast,” he said.

He also pointed out that silver prices had already risen over 30 per cent within a short span this year, underlining the intensity of the rally. Exchange-traded funds worldwide are also seeing higher inflows into both gold and silver.

India’s unique role in silver consumption

Adding an interesting India-specific insight, Bagga noted that out of about 6,000 tonnes of silver imported annually, nearly 1,000 tonnes are used in edible silver leaf for sweets and religious offerings. “Indians literally consume a significant amount of silver every year,” he remarked.

Overall, the discussion painted a picture of a complex global environment where geopolitics, trade policies and technological shifts are deeply interconnected. As Singhvi summed up, tariffs may appear to target foreign nations, but “the real burden is often borne at home,” while precious metals continue to reflect deeper economic and industrial trends.