When it comes to investing in precious metals, all that glitters is not gold. Instead, those who backed silver have enjoyed the greatest gains.
While the gold price soared by 68 per cent in 2025 to close the year at £3,205 per troy ounce, silver rocketed by 164 per cent to about £53 per ounce. Over ten years, the gold price is up 310 per cent, but silver has surged by 451 per cent.
But it has not been an easy ride, and investing in silver is not for the faint-hearted. The market is around 10 times smaller than gold, which means it is far more volatile, with sharp swings in the price as big traders buy and sell.
Last week, after reaching a new record high of about £59, silver suffered its biggest one-day fall in five years – 8.7 per cent. It came after the exchange operator CME Group changed margin requirements for those buying the metal in a bid to reduce volatility.
Margin requirements stipulate how much traders must keep in reserve in their accounts in case their investment plunges. If an exchange raises the requirement, it suggests it is concerned about a sell-off which could leave clients unable to meet their obligations. CME did this twice in a week.
So what has been driving the price and what could happen next?
Over ten years, the gold price is up 310 per cent, but silver has surged by 451 per cent.
Silver has been on an upward march over the past year, along with the price of gold. Kenneth Lamont, principal at the investment research house Morningstar, said the surge has been driven by ‘rising geopolitical uncertainty, the re-emergence of protectionist policies such as tariffs, and growing talk of an AI bubble as US equity markets hit record highs’.
Combined, these have prompted some investors to put more money into perceived safe havens, which can provide some protection if the stock market nosedives.
US government bonds, known as Treasuries, have historically been considered the ultimate safe haven, but concerns about some of President Trump’s policies and the US economy mean investors have started to look elsewhere. Gold has been considered a safe store of value for thousands of years so it is an obvious choice and silver is a logical place to look next.
Central banks, and particularly China, have been big buyers.
Thomas Becket, from the wealth manager Canaccord, explained: ‘The Chinese official holdings of US Treasuries peaked over a decade ago and, while they have not fallen much, they have been diversifying into different assets.’
He added: ‘This is logical. The US demonstrated by freezing Russia’s assets in 2022 that US Treasuries are not the liquid safe haven they were supposed to be.’
Silver has another trump card. Unlike gold, it has industrial uses. Dan Coatsworth, at AJ Bell, highlighted that it is used in solar panels, electronics, semiconductors and medical applications. ‘Demand is strong from these areas, and there is a risk that not enough money is being spent by miners on developing new sources,’ he said. Ben Yearsley, at Fairview Investing, added: ‘Silver is key in the electrification process – nothing is nearly as good. Demand can only be expected to increase.’
But there are reasons for caution. As more investors look to cash in there can be volatility as traders get jittery about how long the price can continue rising and look for the right moment to sell.
‘Recent moves by the Chinese authorities to limit silver exports have added to the excitement and surging volatility,’ Becket said. China, the world’s second-largest silver producer and a global leader in many industries that the metal is so crucial to, has announced new export licences which came into effect on New Year’s Day.
‘The deadline led to a surge of buying,’ said Ed Monk of investment firm Fidelity International.
Holding on could be rewarded. ‘Longer-term, there are reasons why silver could still shine. Supplies are tight and could get even tighter after China imposed restrictions,’ Coatsworth said.
It is possible to buy silver bullion but this is rarely recommended.
Monk added: ‘Growth of electric vehicles and solar tech shows no sign of slowing. Unless replaced with alternative raw materials, silver seems likely to benefit.’
But Becket said: ‘The short-term outlook for further gains is limited. But we are more optimistic on the outlook for broad commodities in 2026 because we expect China to add to stockpiles of industrial commodities and oil.’
Yearsley was also sceptical. ‘Silver is more volatile than gold. From here, it could easily fall another 20 per cent or just as easily break $100 an ounce.’
How to invest
It is possible to buy silver bullion but this is rarely recommended. Holding the physical metal involves storage and insurance costs, and the process of buying and selling can be slow.
An exchange-traded commodity (ETC) is the simplest and cheapest option. This is a type of low-cost tracker fund that follows the price of an asset. The iShares Physical Silver ETC, for example, charges just 0.2 per cent and is up 140 per cent over the past year.
Shares in the world’s biggest silver miner, Fresnillo, climbed 413 per cent over the past year, but picking individual shares is difficult and riskier than holding a fund, where your money is invested across dozens of stocks.
Coatsworth suggests the GlobalX Silver Miners exchange-traded fund (ETF), which tracks a basket of miners or companies that hold royalties on silver production such as Fresnillo, First Majestic Silver and Hecla Mining. It charges 0.65 per cent and is up 147.2 per cent over the past year. Another option is an ETF that tracks a specific theme, such as alternative energy or battery technology, which silver is well placed to benefit from.
For an actively-managed fund, Yearsley suggests Amati Strategic Metals. It has about 15 per cent of its portfolio in silver and silver miners such as Pan American Silver and BHP Group, as well as gold miner Equinox Gold and lithium producer Pilbara Minerals.
The fund, which charges 1 per cent, is up 162 per cent in the past year. Monk suggests the Jupiter Gold and Silver fund, which holds a mix of physical metals and miners. Top holdings include Discovery Silver, Coeur Mining and First Majestic Silver. The fund charges 1.01 per cent and is up 169.5 per cent over the past year.
While recent gains are captivating, investors not yet in may have missed the boat and should be cautious. ‘Buying an asset simply because it has risen is rarely a robust strategy,’ warns Morningstar’s Lamont. ‘When sentiment turns, prices can fall sharply.’