Gold's role questioned as silver set to outperform, says Morgan Stanley

Investors are increasingly reassessing gold’s conventional role as a portfolio risk-management tool. Notes from Morgan Stanley and other major banks point to a dramatic five-week span of commodity volatility that has prompted portfolio managers to rethink allocations to precious metals, highlighting silver and certain base metals as potential relative winners.

Morgan Stanley’s market commentary argues that a mix of falling interest-rate expectations, potential leadership shifts at the Fed and ongoing central-bank purchases creates a backdrop supportive of higher precious metal prices; the bank has outlined scenarios that could push gold toward $4,800 per ounce by year-end. The same analysis also flags upside risk for silver, driven by industrial demand and physical-market deficits. Other major institutions have echoed the view that silver’s gold-to-silver dynamics leave room for further outperformance.

Price action underlines the narrative: gold delivered a strong run into late 2025, reaching record levels, while silver’s percentage gains outpaced gold over the same period, attracting speculative and industrial buying. The recent five-week volatility has therefore had a twofold effect—testing gold’s hedge properties and accelerating flows into metals with stronger industrial fundamentals. ETFs and physical demand have both been notable drivers.

The broader context is monetary and geopolitical. Expectations of lower real rates, shifts in dollar strength, and persistent supply constraints in some metals have combined with geopolitical risk to reshape safe-haven and industrial demand. Silver’s dual role as both a precious and an industrial metal means it is sensitive to both investor flows and manufacturing demand, while copper and aluminium face supply-side pressures that support a commodity-positive outlook.

Analysts see metals as a strategic allocation rather than a short-lived trade. Morgan Stanley and peers advise that investors weigh liquidity needs and the differing risk profiles of gold versus silver and base metals: gold may retain its role as a defensive anchor, but silver’s tighter market balances and industrial exposure could allow it to outperform in the short to medium term. Market participants will watch monetary policy signals and inventory/physical-market data closely to gauge how allocations evolve.