The recent surge in gold prices has grabbed headlines, fuelled by a weakening dollar, strong demand in China and geopolitical uncertainty. However, some diversified precious metal funds, particularly those with a higher allocation to silver, may not have fully mirrored this upward trend. This is because silver has a significant portion of its demand driven by industrial applications, making its price more susceptible to economic cycles compared to gold’s focus on investor sentiment.

The Jupiter Gold & Silver fund offers a compelling differentiation within the precious metals space. While we maintain a core allocation to gold equities (approximately 50%), we strategically incorporate physical bullion and silver miners to exploit a unique opportunity. Notably, unlike our peers who hold minimal to no silver exposure, our fund’s performance hinges on a critical variable: the direction of the gold-to-silver ratio. Put simply, the gold-to-silver ratio is a metric used to express the relative price of gold compared to silver. It’s essentially a way to understand how many ounces of silver you would need to purchase one ounce of gold. When this ratio falls, indicating silver’s outperformance relative to gold, we have historically outperformed our peers. On the other hand, when the ratio has risen – indicating gold outperforming silver – we have lagged our peers. This dynamic is particularly relevant given that over the past few years, the gold-to-silver ratio has meant that funds with a higher allocation to pure gold and little to no silver exposure have benefitted while funds with silver exposure have lagged in performance.

However, since the beginning of March the gold-to-silver ratio has fallen, showing that this trend may be reversing. By incorporating silver miners with their inherent higher beta, the fund is positioned to capitalize on this anticipated silver outperformance, potentially generating superior returns for our investors. This strategic silver allocation presents a compelling opportunity to outperform our peers in the current market climate.

We believe that we are about to enter another positive period for relative fund performance (i.e. silver driving attribution), as silver benefits from monetary and industrial demand, as well as being historically undervalued (still 45% below its high from 2011). Silver has a long track record of outperforming gold when there is increased flow and participation in the asset class.

The diversification benefits of silver in a Gold & Silver fund

Unlike traditional assets, silver’s price movements tend to have a low correlation with stocks, bonds, and even gold. The chart below shows how silver correlates to other major asset classes, and shows that while being most correlated to gold, there is still room for significant dispersion of returns. This can help to reduce portfolio volatility, offering a valuable hedge during market downturns, as demonstrated by the second chart. Furthermore, silver boasts dual demand drivers. Beyond its traditional role as a safe-haven asset in times of economic stress, silver also fuels critical industries like clean energy and electronics. This robust industrial demand creates a dynamic price floor for silver, enhancing its long-term appeal.

Gold annual returns

Source: Oxford Economics, September 2022

Gold prices

Reasons to be bullish

The Fed is widely expected to embark on the long-awaited rate cutting cycle (the bond market currently has 3 cuts priced by year-end). Gold has already digested a reduced outlook for rate cuts over the last 3 months and continues to trend higher. The underlying strength in gold indicates that the outlook for holding ‘forward’ dollars is beginning to weaken.


We continue to see strong structural support from physical markets in the East. The Shanghai Gold Exchange (SGE) has been trading at a notable premium since Q3 2023, and as a result has seen a record amount of bullion flow into mainland China. In addition to the record wholesale demand for gold in China, we are seeing strong demand from emerging central banks (China, Turkey, Singapore, India), all of which are continuing to add gold to their international reserves.

Silver has started to shine in recent months. The latest silver import flows into India (~70Moz) represents an entire months’ worth of global mine supply for a single country. This is clearly an unsustainable development that can only be resolved, in our view, with substantially higher prices to coax previously unavailable inventory back onto the market.

Unlocking our Alpha potential

We believe that our strategic allocation to physical bullion and silver miners, alongside a core holding in gold equities, unlocks a unique value proposition absent from our peers’ offerings. This deliberate composition hinges on the critical variable of the gold-to-silver ratio. As this ratio trends in favour of silver, we are positioned to capture superior returns. Recent indications of a shifting gold-to-silver ratio further bolster this prospect. Our team maintains constant vigilance in monitoring this ratio and actively manages our holdings to capitalise on this alpha-generating opportunity.

The value of active minds: independent thinking

A key feature of Jupiter’s investment approach is that we eschew the adoption of a house view, instead preferring to allow our specialist fund managers to formulate their own opinions on their asset class. As a result, it should be noted that any views expressed – including on matters relating to environmental, social and governance considerations – are those of the author(s), and may differ from views held by other Jupiter investment professionals.

Important information

This document is intended for investment professionals* and is not for the use or benefit of other persons, including retail investors, except in Hong Kong. This document is for informational purposes only and is not investment advice. Market and exchange rate movements can cause the value of an investment to fall as well as rise, and you may get back less than originally invested. The views expressed are those of the individuals mentioned at the time of writing, are not necessarily those of Jupiter as a whole, and may be subject to change. This is particularly true during periods of rapidly changing market circumstances. Every effort is made to ensure the accuracy of the information, but no assurance or warranties are given. Holding examples are for illustrative purposes only and are not a recommendation to buy or sell. Issued in the UK by Jupiter Asset Management Limited (JAM), registered address: The Zig Zag Building, 70 Victoria Street, London, SW1E 6SQ is authorised and regulated by the Financial Conduct Authority. Issued in the EU by Jupiter Asset Management International S.A. (JAMI), registered address: 5, Rue Heienhaff, Senningerberg L-1736, Luxembourg which is authorised and regulated by the Commission de Surveillance du Secteur Financier. For investors in Hong Kong: Issued by Jupiter Asset Management (Hong Kong) Limited (JAM HK) and has not been reviewed by the Securities and Futures Commission. No part of this document may be reproduced in any manner without the prior permission of JAM/JAMI/JAM HK.

*In Hong Kong, investment professionals refer to Professional Investors as defined under the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) and in Singapore, Institutional Investors as defined under Section 304 of the Securities and Futures Act, Chapter 289 of Singapore.