New investors should avoid short-term, tactical entries and instead go for staggered buying via ETFs to manage volatility.
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On September 8, 2025, silver touched a closing high of Rs 124,413 per kilogram.
This industrial cum precious metal is up 49.3 per cent in the Indian market over the past year.
After this rally, experts suggest that investors exercise caution.
Drivers of the rally
Industrial demand, which accounted for 58.6 per cent of the total demand for silver globally in 2024, according to the Silver Institute, is a key driver of price.
“There is strong global demand from green technologies like solar panels and electric vehicles,” says Niranjan Avasthi, senior vice-president, Edelweiss Mutual Fund.
Supply-side constraints have also contributed to the price rise.
“Global silver supply has constantly lagged demand since 2021,” says Chintan Haria, principal investment strategist, ICICI Prudential Asset Management Company.
Safe-haven demand from investors has also risen amid high geopolitical tensions.
“Central banks, which have traditionally bought gold, have started adding silver to their reserves,” says Arihant Bardia, chief investment officer and founder, Valtrust.
The US has even proposed classifying silver as a critical mineral.
Dependent on global growth
If global growth weakens, the industrial demand for silver could soften.
Haria points out that profit booking could also weigh on prices. Avasthi warns that higher US rates, though unlikely at present, could hurt silver.
Silver also tends to be quite volatile.
“In India, changes in duties or a sharp move in the rupee could cause short-term swings,” says Bardia. Its volatility could also deter many investors.
Longer-term prospects intact
Investors are now questioning whether silver can rally further after such a sharp rise.
“Silver remains well supported by the clean energy transition and investment demand,” says Avasthi.
While not ruling out some consolidation, Haria says that structural demand from both traditional and new-age industries is expected to sustain momentum.
The gold-to-silver ratio is at around 85x, compared to its long-term average of about 70x.
“This suggests that silver has the potential to catch up and that the rally may have further room to run,” says Alekh Yadav, head of investment products, Sanctum Wealth.
Stick to asset allocation
Experts suggest caution after the rally.
“The recent surge in silver looks speculation-driven and reflects recency bias,” says Shweta Rajani, head of mutual funds, Anand Rathi Wealth.
“Existing investors should maintain an allocation of 5-7 per cent in silver,” says Naval Kagalwala, chief operating officer and product head, Shriram Wealth.
Those who have exceeded their original allocation should consider partial profit booking.
New investors should avoid short-term, tactical entries and instead go for staggered buying via ETFs to manage volatility.
“The best approach is to avoid lump-sum investments at peak levels. Instead, start or continue with a systematic investment plan (SIP), which will help average out the cost and reduce the impact of short-term volatility,” says Rajani.
A five-year-plus horizon is needed to benefit from investing across economic cycles, adds Kagalwala.
Silver is more volatile than gold.
“It is suitable for high-risk investors, while conservative investors should avoid it,” says Yadav.
Run these checks
Altogether 16 exchange-traded funds (ETFs) from various fund houses are available.
Check the expense ratio (which should be low) and liquidity of the ETF on the exchange (higher is better).
Rajani highlights the importance of tracking error, which indicates how closely an ETF follows the price of silver (lower is better).
Kagalwala says fund-of-funds (FoFs), which invest in silver ETFs, may also be considered for better liquidity.
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Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.
Feature Presentation: Ashish Narsale/Rediff