Is Silver Ready to Outrun Gold?

Jeff Praissman is joined by Will Rhind of GraniteShares to break down the evolving relationship between gold and silver, and why silver may be positioned to outperform in the current macro environment. From industrial demand and supply deficits to real rates, dollar weakness, and geopolitical risk, they explore whether silver’s long-awaited catch-up trade is finally underway.

Summary – IBKR Podcasts Ep. 345

The following is a summary of a live audio recording and may contain errors in spelling or grammar. Although IBKR has edited for clarity no material changes have been made.

Jeff Praissman 

Hi everyone, this is Jeff Praissman with the Interactive Brokers Podcast. It’s my pleasure to welcome to the podcast studio Will Rhind from GraniteShares. Hey, Will—how are you? 

Will Rhind 

Good, thanks, Jeff. Thanks so much for having me. 

Jeff Praissman 

Oh, it’s my pleasure to have you in, and I’m really excited for this topic. Let’s start with some fundamentals. Gold has been dominating globally in U.S. dollars, which creates this kind of inverse relationship. Will, could you walk us through exactly how that price mechanic works in practice? 

Will Rhind 

Yeah, sure. So gold, as you say, is denominated in U.S. dollars, and that’s the global gold price. Although gold clearly is a universal asset, meaning that it trades wherever it is in the world in a local price as well. So we always think about the gold price being a U.S. dollar price, and that is the official price for that. And so, depending on whether gold’s going up or down, it makes it cheaper or more expensive for people around the world who are not on the dollar to buy it. 

Jeff Praissman 

Yeah, so I was gonna ask—if I’m a buyer in Europe or Asia, and let’s just say the U.S. dollar weakens by 10%, what actually has to happen for that to make gold more attractive? Is it instant, or is it sort of more of a slower transfer between that currency rate? 

Will Rhind 

Yeah, I mean, I suppose it depends on who the buyer is. Gold is something that is not just about investors and traders—gold has real-world applications. Most notably, for example, if you are a jewelry buyer, then you’ll be very sensitive to the price. So if you are a jeweler in Europe or in Asia, you’ll be very sensitive to the price of gold. And so when that price weakens, you may choose to act on that immediately, versus anybody else who’s maybe an investor, et cetera, who can take a view as to whether that’s the right price or not. But yeah, the price of gold will affect different buyers and consumers around the world for different reasons. 

Jeff Praissman 

Got it. And there have been some pretty big examples of this inverse relationship in the past. A couple that come to mind are the Bretton Woods era and also the early 2000s. But of course, like everything else, there are always exceptions, right—when both rose together. Both gold and the dollar rose together during systemic stress. If we’re looking at today’s environment—the U.S. elevated deficits, changing interest rate differentials, and increased central bank buying—which historical period does this most closely resemble in your mind? And what makes this time different, if anything? 

Will Rhind 

Yeah, so gold has—over the longer term—its strongest relationship really is against the dollar. Gold moves inversely to the dollar over long periods of time, meaning that as the gold price typically rises, the dollar falls, and vice versa. That relationship is interrupted from time to time, typically in periods of economic stress, like the 2008 financial crisis, for example, where you can have a situation where the dollar is rising at the same time as gold. I think if we think about the period in history that closely resembles this, we can look at it from a few different angles. First of all, we’ve seen a really unbelievable return from gold last year—2025. And this gold rally has been going on for some years. But the period that mirrors this closest in terms of returns in the gold market would be the 1970s, where in 1979, as an example, gold posted a 126% gain, which was incredibly significant at that point. 

So from a return perspective, it looks and feels a lot like the rally that we saw in the 1970s. But I think there are some other interesting things that resemble the 1970s period as well in terms of what we’re seeing today. In the 1970s, particularly in the period when gold was rallying—which was the end of the seventies, peaking obviously in 1980—we had some of the same factors that we’re dealing with right now. So we had oil crises, we had Middle East conflicts, we had stagflation, and we had safe-haven buying into gold. 

All of which we’re seeing today—ironically: U.S.-Iran tensions, China resource rivalry, things like this. The other thing, of course, is inflation and monetary policies. So we had inflation concerns in the seventies, just like we do today. We now have loosening fiscal and monetary policies, which are weakening the dollar—just like, again, in the seventies. And so this idea of geopolitical and economic turmoil, inflation and monetary policy, and then dollar weakness and diversification—so all of that kind of put together—it feels like a lot of those things which propelled gold to all-time highs in the 1970s are kind of similar to what we’re seeing today. 

Jeff Praissman 

So it’s really like that old expression—the more things change, the more they stay the same. 

Will Rhind 

Yeah, exactly. 

Jeff Praissman 

I’d like to bring this to the investor level. So let’s just say someone’s convinced we’re entering a sustained period of dollar weakness. What role should physically backed gold products play in their diversified portfolio? And maybe more importantly, how should investors think about the timing? Should they wait for confirmation of dollar weakness, or is gold more effective as a preemptive hedge against currency erosion? 

Will Rhind 

I think it comes back to how you think about the concept of dollar weakness and whether, in the context of a portfolio, you think of it as a purchasing power problem, or it’s actually not something that you’re too worried about because you’re dollar-denominated. Therefore, a weakening dollar—if you’re being paid in dollars, if you’re investing in dollars—doesn’t necessarily affect you to that degree. So I think it’s kind of a combination, but most people view it as an erosion of purchasing power. And how that translates in a portfolio is that you want to make money or try to profit from the dollar weakening. And one way to do that is to buy gold. And because we talked about that historical relationship between gold and the dollar, typically over the longer run, in periods where the dollar is weakening, gold prices are rising. So there’s a way that by owning gold in a portfolio, you can effectively profit from that weakening dollar. 

Jeff Praissman 

And I’d like to shift to the recent market action. Like you said, gold’s been up last year—gold was huge—but it also surged again after the recent jobs report showed unemployment rising to multi-year highs, with investors immediately pricing in Fed rate cuts as well. But here’s what I’m curious about: how direct is that connection really? When traders see a weak number, are they buying gold because they anticipate lower rates making it more attractive? Or is it more psychological, like you kind of mentioned before—just a loss of confidence in economic stability? Or is there even a way to distinguish between the two motivations, and is it sort of a guessing game? 

Will Rhind 

Yeah, I think the key word you mentioned there is traders. Traders very much would be reacting in terms of short-term or live market information. And clearly, from a technical perspective, people are looking at all sorts of different technical indicators that would make gold a buy or a sell at any given moment, based upon economic releases and data releases that are going on. And like I said, gold is something that is used in industry—it’s used by the jewelry sector. So there are a lot of consumers, a lot of buyers for gold around the world who have their own motivations for that. I think, though, that probably from a longer-term investor perspective, investors really think about gold as a permanent piece of property in the portfolio—in a diversified portfolio, certainly. And from that perspective, it’s viewed more as a defensive asset versus an offensive asset. And it probably hasn’t felt too much like that over the last few years, given the returns that gold has delivered. However, for most people, they buy gold as a hedge against perceived risk—market risk, systemic risk, et cetera. And so gold, from a longer-term perspective, is much more like a permanent piece of real estate in the portfolio. And then, if you’re a longer-term investor, you are less sensitive to short-term events and more focused on using that gold as a hedge against the sensitivity that might affect the broader or bigger part of your portfolio—more, i.e., equities or bonds. 

Jeff Praissman 

And that actually leads me perfectly into my next question. And it’s funny—it’s something I didn’t really think too deeply about until I was just doing some research for this podcast. Gold is described as a non-yielding asset, and that’s something I really didn’t think about. Like, it doesn’t pay dividends, it doesn’t pay interest. Could you kind of break down the math? Like, there is an opportunity cost of holding gold. I know you’re saying it’s generally thought of as a hedge for portfolios, but are there times or historical thresholds or real rate levels where we’ve sort of seen this shift into significant gold buying? 

Will Rhind 

Yeah, absolutely. So it’s kind of interesting because if you think about gold as a non-yielding asset, from a first-principles perspective, sometimes it’s interesting to frame, well, why is that the case? And the answer is that gold has no credit or counterparty risk. A bar of gold can’t go bankrupt, so therefore there shouldn’t be any yield because there’s no risk. The risk is credit risk that’s introduced when you buy a bond, when you put your money in a savings account at a bank. The reason why you have a yield is because you are lending that money to somebody else and you’re receiving an interest rate in return—so therefore your money’s at risk. So from that perspective, gold could have an interest rate. Gold could have a yield if you lent your gold out.  But the vast majority of gold buyers don’t want to do that because the reason they’re buying gold is because they want an asset that doesn’t have credit or counterparty risk. And therefore, they’re prepared to accept that trade-off—that there is no direct yield—in return for owning an asset of the highest quality that doesn’t have those risks associated with normal risk assets that we talk about all the time in markets. 

So that’s kind of an interesting thing that I think needs to be said. Your point about what part of the cycle, or different parts of the cycle, makes gold more or less attractive—I think all things being equal, clearly lower interest rates and lower real interest rates in particular—which is nominal interest rates minus the rate of inflation—the lower those go, and for a long period of time (for example, in the last few years they were negative), therefore the cost of owning gold, if you want to look at it like that, was negligible. It was inconsequential because you couldn’t get any return on short-term, at least, interest-bearing assets anyway. But the more real return that’s available in the market—particularly at the shortest end of the curve, being Treasury bonds, et cetera—the more people will have to make that decision about what level of risk they’re comfortable with and whether they’re comfortable with whatever credit is giving them the yield in the market. And then, of course, that’s the classic risk-reward trade-off that you might have. You might have bank accounts that yield a high level, but then the bank that’s offering that might not be as safe as others, and therefore there’s a credit-risk conversation within that. 

So I think, all things being equal, the ebbs and flows of gold—outside of shocks or outside of extraordinary market situations—are guided typically by real interest rates. And that makes complete sense. And then you have your investor dollars competing for capital. They’re competing with gold against gold. So in periods where you’re going to have low real rates or lower real rates, the cost of owning gold is negligible. But if you have higher real rates, then there’s a real trade-off or a decision to be made. 

Jeff Praissman 

Yeah. And gold gets all the headlines, right? But I want to switch gears a little bit and talk about silver, which is often called gold’s little brother, because the performance dynamics can be quite different. Looking at last year, both metals moved higher, but the gold-silver ratio really fluctuated significantly. Could you explain what’s been driving the performance differential between the two metals last year and kind of starting this year? And is it really primarily the industrial demand component of silver, or are there other factors at play that have caused silver to either lag or recently outperform gold during the different phases of 2025? 

Will Rhind 

Yeah, I mean, there are certainly a number of different reasons. I think the first thing to point out is that typically gold and silver prices are highly correlated to each other over the long run. So in a normal market cycle where gold prices are moving up, one would expect to see silver prices move up faster because silver and gold are positively correlated. But because silver is more industrial, it’s a smaller market than gold, and it has more price volatility—it’s a more volatile asset than gold. So all things being equal, in a market where gold prices are rising, you would expect silver prices to outperform, albeit with more volatility. 

I think what was unusual about this market, at least in my opinion, was that we’ve been in a structural bull market for gold for some time, and we reached all-time highs or prices in gold that would have been almost inconceivable 10 years ago. And yet, the silver price didn’t react in the way that you might have thought. In other words, silver prices didn’t outperform gold and didn’t react to the upside. And I think for a lot of people, this was sort of more about when rather than if silver would react. So in some respects, I think what we’ve seen in silver is a bit of a catch-up in terms of the price action, because gold has been so stratospheric last year and has started to continue again into this year. I think some of that is a bit of a catch-up from the last few years. Now, that being said, there are some really good fundamental reasons as to why silver prices are rising. Silver is in a deficit, which means that we have more demand for silver than we have supply. Silver is not a primary mined metal, meaning that it’s a byproduct of other types of metal mining—typically things like copper mining. And as everybody knows, there has been a woeful lack of investment in mining over the last decade-plus because prices have been low, and therefore the incentive for miners to commit CapEx to invest in new production has been low. So we have a situation where the market is in deficit. We suddenly now have big demand levers in terms of the electrification of everything. Silver is a critical metal that’s used in the production of electricity, whether it’s in electrical goods generally or whether it’s for production in terms of solar panels, et cetera. We have this huge demand to electrify everything in our economy—so therefore, demand for silver. And then we have the AI race as well, which is further electronic and technological capacity. So these things are really hitting at a time where we haven’t invested in the production environment. And again, that’s not just a silver story—that’s for many metals as well. And in this environment where gold prices are hitting all-time highs, you see that now reflected, I think, in the price of silver as it catches up. 

Jeff Praissman 

I’m gonna skip question seven, because I think you covered a lot of it with that answer, which is fine—perfect, actually. I just wanted you to know, so you’re not wondering why I skipped it. So, Will, for investors who are convinced about the precious metals thesis we’ve just been discussing—the weak dollar, the lower rates, safe-haven demand—how do you think about portfolio allocation between gold and silver? Should investors just view silver as a leverage play on the same themes that drive gold, or from what we discussed with its industrial uses, is it different enough that it deserves its own separate analysis? 

Will Rhind 

I think it is. And when it comes to gold and silver investors, I’ve been dealing with both of them for many years. Typically what you find is that some people are very much purists for gold, and they will only think about investing in gold and only have gold in the portfolio. Other people are much more open-minded in terms of—if you like gold, chances are you also like silver, you also like platinum, palladium, et cetera. So I think it really just depends on what type of investor you are. Silver does have more volatility, so again, it goes back to what’s the reason that you’re investing in gold and investing in silver in the first place. If it’s purely from a hedge perspective, silver, I think, deserves more analysis in terms of whether that’s the right fit for a portfolio on a purely risk-off basis. But for those that want a bit of a blend of both, or believe strongly that in an environment like this—or certainly what we’ve seen the last few years—where there’s a bid for hard assets, that it’s not just gold prices that are going to go up, it’s going to be silver, and there are all sorts of other hard assets that benefit from this environment as well. 

Jeff Praissman 

Will, you touched on it in the beginning of the podcast—geopolitical risk. We’ve focused more on the monetary policy and the currency dynamics. As you mentioned, we’re really seeing a lot of geopolitical tensions around the world, from ongoing conflicts to trade disputes to concerns about de-dollarization among certain nations. How much of gold’s recent strength do you attribute to these factors versus the purely economic drivers we’ve been discussing? And maybe more importantly, how should investors weigh geopolitical risk when making these allocation decisions about precious metals? 

Will Rhind 

Yeah, I think it’s hard to put a number on it specifically, but it clearly is a factor. You saw after the news broke about the Venezuela raid with Maduro, the gold price took off. The same thing after Russia invaded Ukraine—and I could go on and on in terms of these specific examples. So we definitely acknowledge that there’s a premium in there for geopolitical tensions, for conflicts, for crises. It’s difficult to always say exactly what that might be, but it’s a significant factor and a significant reason as to why people invest in gold—because again, it goes back to the hedge argument that you just never know when these things could escalate, how they could escalate, and how they spill over. And therefore, what is the collateral damage to your portfolio? Typically, normally, the larger part of your portfolio—if you’re talking about a gold allocation of somewhere between 5% to 10%—by definition, you have 90% of your portfolio or more that’s going to be in other asset classes. So that’s the biggest risk that you’re holding, and therefore these kinds of events typically will impact that part of the portfolio a lot more. And I think when we look at the different conflicts around the world, like you said—whether it’s wars, whether it’s the threat of wars, interventions, whether it’s de-globalization, an upending of traditional norms or world order—all of these things basically come back to one word, which is uncertainty. And I think that gold loves—or thrives on—uncertainty. And that’s something that portfolio managers and investors don’t like from a longer-term investing perspective. And therefore, in an environment where there’s uncertainty, people perhaps increase exposure to defensive assets such as gold. And therefore, that’s the evaluation you have to make. 

Jeff Praissman 

And Will, this is great. I’ve got one final question. We covered a ton of ground today on gold and silver and what makes them attractive. But I also want to talk about the how, right? So for investors who may have only invested in stocks and bonds traditionally, could you kind of high-level explain the key differences that would help them understand whether it’s physically backed precious metals ETFs versus, say, mining stocks, or even futures contracts, or even physical bullion stored at home? 

Will Rhind 

No, absolutely. So it’s funny—we’re talking about the 1970s. If you were an investor in the 1970s, of course there were no gold ETFs. So your option, really, from an investment perspective—certainly from a portfolio perspective—was only to buy mining stocks. And mining stocks have been around a long time. There are different flavors of mining stocks in terms of large companies, small companies that focus purely on gold or purely on silver, to large diversified mining corporations and conglomerates. But all that being said, they’re not a direct representation of the gold price. In other words, if the price of gold goes up 10%, the price of—you name it—a gold mining company doesn’t automatically go up by 10%. And that’s due to a number of factors: the company doesn’t directly represent an investment in gold, because there’s operating leverage, typically there’s management risk, there’s project risk—there are all sorts of other things that go into that. So gold mining companies historically have been said to be a leveraged play on gold. All things being equal, in an environment where gold prices are going up, gold mining companies have the potential to do better than gold. However, that’s not always worked out that way, because typically what happens is that in a gold bull market, these companies face cost pressures—whether it’s the cost of energy going up, which is a huge input in terms of mining expenses, the cost of labor, et cetera—and therefore sometimes they don’t get the benefit and underperform the gold price. 

Buying physical bars and coins has been around forever. That’s still a very popular thing to do. You can buy gold coins, buy gold bars. Those are typically all subject to premiums and discounts. So when you buy from anybody—a coin dealer, a coin merchant, et cetera—typically expect to pay a premium to the gold price. And then if you sell it back, expect to receive a discount. And that spread can be quite high, depending on what’s going on in the market. ETFs, which came along in the early 2000s, have become by far and away the most popular way for people to invest in gold. And when it comes to physical gold, the proposition is very simple: a gold ETF, assuming it’s backed by physical gold, just tracks the gold price. If the gold price goes up by 10%, it tracks it up. If it goes down by 10%, it tracks it down by 10%, and typically charges a low fee for doing so. 

There are a number of gold ETFs. We have one of our own at GraniteShares, but there are a number out there, and it’s a very efficient way to track the gold price. And I think most importantly, in terms of what’s made them so successful, the innovation was to allow you to own gold in a portfolio—pure gold in a portfolio—for the first time, versus proxy investments like gold stocks. Or if you bought coins yourself, you couldn’t own that in your portfolio; it would have to be outside of your portfolio. 

Jeff Praissman 

Will, this has been great. Thank you so much for stopping by the Interactive Brokers Podcast studio. For our listeners, you can find more from Will Rhind at www.graniteshares.com. Also, on our website, if you click on Education, you can find more contributions from GraniteShares as well. Thank you, Will. 

Will Rhind 

Thanks, Jeff. Pleasure having me. Thank you.