This festive season, it is not just gold—silver too is stealing some of the shine. Both precious metals have surged in recent weeks, creating ripples across futures markets and retail counters. A blistering rally in silver continued on September 25, with the white metal surging past $45 for the first time in 14 years. On the domestic front, the MCX December Silver contract rose 2% to Rs 1,36,700. Spot silver, having risen for five consecutive weeks, is on track to post a sixth straight weekly gain, drawing renewed investor attention.
In a recent YouTube podcast, Zerodha addressed the question on every investor’s mind: should gold be replaced by silver? “Gold has given some 43% returns and silver 48%. Compare this with Nifty, which is just 6.5%. So yes, both metals have been outperforming equities by a large margin,” said Prateek Singh, Founder & CEO, LearnApp & Zero1 by Zerodha. The discussion focused on three key questions: could prices double from here, which metal to buy and how much, and the best way to invest—physically or digitally.
Gold, according to Singh, has historically been a lifeline during crises. “Back in 1991, when our forex reserves were critically low, India had to pledge gold abroad to stay afloat. Gold literally saved the country,” Singh noted. The metal continues to hold emotional and institutional appeal, with central banks worldwide maintaining significant reserves. The pandemic in 2020 further reinforced gold’s position as a store of value, driving demand from investors seeking safety.
Silver, however, is increasingly driven by industrial demand. Unlike gold, which is purchased largely for emotional and wealth-preservation reasons, silver is used in heavy machinery, semiconductor chips, and electric vehicles (EVs). “If EV demand goes up, silver demand doubles. EVs use twice as much silver as traditional vehicles, and that’s a real, practical reason to buy silver,” Singh explained.
The correlation between these assets is also instructive. Gold and silver share a strong positive correlation of 0.749, meaning buying both together offers limited diversification. Meanwhile, silver has a mild negative correlation with Nifty, while gold shows virtually no correlation. “Silver can act as a modest hedge against equities, whereas gold is your long-term store of value,” the podcast emphasized.
Currency fluctuations play a significant role in returns. India imports the majority of its precious metals—about 82–86% of gold and 92% of silver—paying in dollars. “Over the last 30 years, gold returned 7.6% in USD, but factoring in rupee depreciation, it’s effectively 11%. Silver’s 6.4% USD return jumps to 9.8% domestically,” Singh explained.
When it comes to buying, investors have multiple options. ETFs are liquid but carry brokerage and annual fees. Digital gold is convenient but incurs 3% GST upfront and storage costs. Mutual funds investing in gold or silver ETFs involve double fees but are professionally managed. Physical gold and silver provide tangible ownership but are the priciest due to GST, making charges, and storage fees. “There’s no one-size-fits-all approach. Choose based on convenience, cost, and your emotional preference,” Singh advised.
GOLD
Option: Gold ETF
What is it?: Exchange-traded fund that holds physical gold.
Liquidity: Intraday on NSE/BSE; settlement T+1.
Costs: Brokerage + exchange/clearing/SEBI fees; stamp duty on buy; AMC expense ratio (scheme-specific).
Option: Gold – Digital
What is it?: Platform-based vaulted gold; buy/sell on app; redeemable as coins/bars.
Liquidity: Platform buy/sell; physical delivery as per vendor; not exchange-traded.
Costs: 3% GST on buy; platform fees; storage often free for 5 years then may charge 0.3–0.5% p.a.; may have delivery charges for redemption.
Option: Gold Mutual Fund (FoF)
What is it?: Mutual fund that invests in Gold ETFs; NAV-based.
Liquidity: Purchase/redeem at end-of-day NAV; redemption proceeds within T+3 working days.
Costs: FoF expense ratio (plus underlying ETF costs); stamp duty on purchases; exit load (scheme-specific).
Option: Gold – Physical
What is it?: Jewellery/coins/bars you hold yourself.
Liquidity: Immediate via jewellers/bullion dealers; resale spread varies.
Costs: 3% GST on metal; making charges (jewellery) + dealer spread; locker (if any).
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SILVER
Option: Silver ETF
What is it?: Exchange-traded fund that holds physical silver.
Liquidity: Intraday on NSE/BSE; settlement T+1.
Costs: Brokerage + exchange/clearing/SEBI fees; stamp duty on buy; AMC expense ratio (scheme-specific).
Option: Silver – Digital
What is it?: Platform-based vaulted silver; buy/sell on app; redeemable as bars/coins.
Liquidity: Platform buy/sell; physical delivery as per vendor; not exchange-traded.
Costs: 3% GST on buy; platform spread; storage often free for 5 years then 0.3–0.5% p.a.; may have delivery charges for redemption.
Option: Silver ETF – Fund of Fund (FoF)
What is it?: Mutual fund FoF that invests in Silver ETFs; NAV-based.
Liquidity: Purchase/redeem at end-of-day NAV; redemption proceeds within T+3 working days.
Costs: FoF expense ratio (plus underlying ETF costs); stamp duty on purchases; exit load (scheme-specific).
Option: Silver – Physical
What is it?: Coins/bars you hold yourself.
Liquidity: Immediate via dealers; resale spread varies.
Costs: 3% GST on metal; dealer spread; locker (if any).
Finally, Zerodha introduced the THC framework—a hype cycle approach to investing. “As soon as something hits a high, everyone talks about it. But that doesn’t mean it’s the right time to go all in. Start small—5-10% of your portfolio or a monthly SIP in gold or silver ETFs—and think long term,” the host said.
In summary, while silver is enjoying a moment in the spotlight, Zerodha emphasizes a balanced approach. Gold remains the store of value, while silver is industrially driven. Investors should be strategic, patient, and cautious, avoiding emotional decisions driven by short-term hype.