Gold made headlines this year with prices touching Rs1 lakh for 10 gram, as investors and central banks alike rushed to buy the yellow metal amid the global geopolitical and economic uncertainties.
Gold was also in the spotlight for the price volatility. Prices saw a sharp drop when the conflict between India and Pakistan eased and the US and China signalled progress in trade talks.
While gold was making headlines, another precious metal has been quietly making investors smile. Silver gained near 35 per cent in 2024. Its prices recently hit Rs1 lakh per kilo and industry watchers expect it to continue shining brightly.
Both gold and silver are seeing strong uptick as an investment asset as well as jewellery. However, silver has wide-ranging industrial use and, therefore, potentially never-ending demand. That is driving the optimism among the silver bulls.
In the past few months several asset management companies have launched schemes linked to silver. In April, DSP Mutual Fund launched its silver ETF fund of funds (a mutual fund that invests in other mutual funds), which primarily invests in units of DSP Silver ETF (exchange traded fund). It offers a convenient way for people to invest in silver. On May 9, it closed for subscription, but will open again for continuous sale and repurchase from May 19.
Earlier this month, Groww launched its silver ETF fund of funds and Zerodha Fund house launched its silver ETF. In March, 360 One Mutual Fund launched its silver ETF. Several other asset management companies also offer investing in silver via ETFs or fund of funds.
“Silver presents a compelling investment opportunity in the current economic landscape, supported by a convergence of macroeconomic factors and rising industrial demand,” says Anil Ghelani, head of passive investments and products at DSP Mutual Fund. “Silver has demonstrated resilience during periods of inflation, currency depreciation and market volatility. In addition to its status as a precious metal, silver holds significant industrial value, particularly in sectors such as solar energy, advanced electronics and electric vehicles.”
Silver is a good conductor of electricity. It helps in efficient transfer of power generated by the solar panels. It is also used in components in electric vehicles.
It was in November 2021 that markets regulator SEBI allowed asset management companies to launch silver ETFs. In January 2025, assets under management (AUM) of such funds crossed Rs13,500 crore. Folios of silver ETFs more than tripled from 1.9 lakh in January 2024 to 6.2 lakh in January 2025.
Vishal Jain, CEO of Zerodha Fund House, said silver provided investors with a valuable tool to diversify their portfolios and capitalise on the metal’s characteristics. “From a longer-term perspective, the structural story of industrial use cases for silver holds good. Starting from renewable energy, to electronics, to telecommunications and automotive components,” said Jain.
Silver supply had consistently fallen short of demand over the last few years; 2024 was the fourth consecutive year of a supply deficit. This shortfall is expected to continue in the foreseeable future, said Ghelani of DSP MF.
According to The Silver Institute, total global silver supply is forecast to grow by 3 per cent in 2025 to an 11-year high of 1.05 billion ounces. However, it sees global silver demand remaining stable in 2025 at 1.2 billion ounces, as gains in industrial applications and retail investment will be mitigated by weaker jewellery and silverware demand.
“Historically, whenever there is momentum in precious metals, silver tends to do well. But, when retracement starts, silver can correct more than gold. This is something one has to keep in mind while investing,” said Anant Ladha, founder of Invest Aaj for Kal. Silver has underperformed in the past, but now could be its time to catch up, and it could even grow at a faster compounded annual growth rate than what we saw in the past decade, he said.
Zerodha’s Jain said silver and gold should not be looked at as mutually exclusive and should co-exist in one’s investment portfolio. And Ghelani said gold and silver could play complimentary roles in a diversified portfolio.
“If we see the current gold/silver ratio and compare it to long-term history, the prices of silver appear relatively undervalued, which could indicate a potential for silver to outperform,” said Ghelani.
Another thing works in favour of silver ETFs is the tax structure. The applicable long-term capital gain (units sold after 12 months) on silver ETF is 12.5 per cent, similar to equity taxation.
Ladha prefers silver funds over silver ETFs, especially for new investors. ETFs require a demat account and may face some liquidity issues at certain points, unlike a fund of funds, where an investor can put in money and redeem at his convenience.