Silver prices may be trading comfortably around $78 to $80 per ounce, but Commerzbank says silver’s fair value is closer to $40 per ounce. The bank argues that silver is drawing strength mainly from higher gold prices rather than its own standalone fundamentals.
For Indian investors, that matters because silver and gold often move together in the domestic bullion market, but global safe-haven demand, Federal Reserve policy and geopolitical risks can distort valuations. If gold extends its rally toward $5,000 per ounce, Commerzbank believes silver could still climb to $90 per ounce despite looking expensive on a pure valuation basis.
Why does Commerzbank say silver’s fair value is closer to $40?
Commerzbank says silver’s fair value is nearer to $40 an ounce because its current market price appears too high when judged against its own economic fundamentals. According to Thu Lan Nguyen, Head of FX and Commodity Research at Commerzbank, silver has not been moving primarily on drivers such as bond yields and the U.S. dollar.
Nguyen said silver has been propelled more by momentum in gold than by standalone demand signals. In her latest precious metals note, she wrote that silver "has risen mainly because it was undervalued relative to the yellow metal."
How is gold influencing silver prices?
Gold is the key force behind silver’s strength, according to Commerzbank. Nguyen said an estimate of silver’s fair value that explicitly includes the gold price fits the actual silver price trend more closely.
That means silver is not trading purely on industrial demand, inflation expectations or currency moves. Instead, bullion investors are treating silver as a secondary beneficiary of the gold rally.
Why is silver still holding near $78 to $80 despite overvaluation concerns?
Silver is holding near $78 to $80 an ounce because gold remains well supported as a safe-haven asset. Commerzbank believes that as long as gold stays highly valued, silver is also likely to remain supported.
Nguyen does not expect the trend to end anytime soon, even though the bank sees silver as overvalued on its own merits. The reason is simple: gold’s safe-haven appeal remains intact.
What is supporting gold prices right now?
Gold is being supported by safe-haven demand and by strong central bank buying. Commerzbank said central banks continue to view gold as a neutral, apolitical monetary asset, which keeps underlying demand firm.
Although gold has struggled in recent weeks, Nguyen said it has not lost that safe-haven appeal. She added that gold has at times been used as a source of liquidity by central banks and investors, but that has not changed the broader bullish backdrop.
How did the Iran war affect silver valuation?
The outbreak of the Iran war helped correct part of silver’s earlier overvaluation, according to Commerzbank. Nguyen said the bank’s model value for silver, excluding gold, remained relatively stable and recently pointed to a much smaller downward correction than the one that actually happened.
That suggests the market adjustment went deeper than silver’s own fundamentals alone would justify. In Commerzbank’s view, part of the excess valuation was therefore removed after the geopolitical shock.
What did Thu Lan Nguyen say about this correction?
Nguyen said: “Since the outbreak of the Iran war, it is now interesting to note that the model value we estimate (excluding gold) has remained relatively stable and has recently signalled a much smaller downward correction than actually occurred.”
She added: “Thus, with the outbreak of the Iran war, part of the ‘overvaluation’ was corrected, and the silver price has moved closer to its fundamentally justified levels again.”
Even after that correction, Nguyen said there is still a significant discrepancy between silver’s fundamental value and its market price. She linked that gap directly to gold’s continued high valuation.
Will higher gold prices push silver to $90 an ounce?
Yes, Commerzbank believes silver could rise to $90 an ounce if gold moves higher as expected. The bank remains bullish on both precious metals despite warning that silver looks expensive on a standalone basis.
Last month, Commerzbank upgraded its gold and silver price forecasts. The bank expects the Federal Reserve to cut interest rates in the second half of the year, and that easing cycle is projected to lift gold back above $5,000 an ounce.
What is Commerzbank’s forecast for gold and silver?
Commerzbank expects:
- Gold to move back above $5,000 per ounce
- Silver to rise to $90 per ounce
- Federal Reserve rate cuts in the second half of the year
What does this mean for Indian investors in gold and silver?
Indian investors should read Commerzbank’s view as a sign that silver may stay supported as long as gold remains strong, even if silver looks overvalued by traditional models. For buyers in India, this creates both opportunity and risk in the bullion market.
If international gold prices remain elevated and the Federal Reserve moves toward rate cuts, domestic gold and silver prices could also stay firm in rupee terms. Any weakness in the Indian rupee against the U.S. dollar would add further support to local bullion prices.
Why should Indian bullion investors watch gold more closely than silver?
Indian investors should watch gold because Commerzbank’s analysis suggests silver is currently following gold rather than leading on its own fundamentals. In practical terms, that means movements in XAUUSD, central bank buying, safe-haven flows and geopolitical risks may matter more for silver pricing than usual.
For traders and long-term buyers in India, the key watchpoints are clear: whether gold sustains its safe-haven premium, whether the Federal Reserve starts cutting rates in the second half of the year, and whether silver can justify prices near $78 to $80 while its fair value remains closer to $40. If gold breaks above $5,000 per troy ounce, silver’s path toward $90 could strengthen further.
