IndianMarkets

Silver ETFs Surge: Investors Shift from Gold!

In 2025, Silver Exchange Traded Funds (ETFs) become a sought-after alternative to gold, as investors look for greater returns amid global market instability. However, analysts warn about the significant price volatility associated with silver.

Summary:
In 2025, Silver ETFs have gained remarkable traction among investors, outpacing gold ETFs in inflows and performance. The shift comes amid growing industrial demand, macroeconomic tailwinds, and a strategic pivot towards precious metals diversification. Yet, market experts warn of silver’s higher historical volatility, advising investors to balance expectations with caution.

Silver Steps into the Spotlight
Traditionally viewed as gold’s lesser-followed sibling in the precious metals market, silver has outshone gold in 2025, particularly through Exchange Traded Funds (ETFs). As of mid-year, Silver ETFs have seen a significant spike in assets under management (AUM), beating gold ETFs in terms of net inflows and percentage returns. This reversal in investor sentiment is being driven by a mix of macroeconomic, industrial, and investment trends that are tilting the scales in silver’s favour.
Silver’s dual nature—as both a precious metal and a key industrial component—has placed it at the intersection of monetary hedging and technological transformation, especially amid the rising adoption of green energy and electric vehicles. Meanwhile, gold, although still a solid hedge against inflation and geopolitical risks, has been perceived as slower-moving in a year where investors seek tactical agility.

Data Signals Strong Momentum
In the first half of 2025, Silver ETFs in India and abroad have recorded inflows upwards of ₹1,500 crore, compared to ₹900 crore into gold ETFs. Globally, the iShares Silver Trust (SLV) and Aberdeen Standard Physical Silver Shares ETF have achieved year-to-date returns of 17-19%, surpassing gold ETFs, which have typically returned around 8-10%.
According to data from AMFI (Association of Mutual Funds in India), Silver ETFs have more than doubled their investor base compared to 2024, with younger and more risk-tolerant investors showing preference. This increased retail participation is not only driving volumes but also deepening the market’s liquidity, making silver a viable alternative to traditional hedging tools.

Why Silver is Shining Brighter in 2025
Several macroeconomic and sector-specific factors have contributed to silver’s strong performance in 2025:
1. Increase in Industrial Demand: Silver is essential in the production of solar panels, electric vehicle batteries, 5G technology, and semiconductors. The global shift towards clean energy and sustainable technologies has resulted in a consistent rise in silver demand.
2. Supply Limitations: Unlike gold, silver is heavily used in industrial applications, and its extraction frequently occurs as a by-product of mining for other metals such as copper and zinc. With supply chain disruptions and increased mining expenses, output has decreased, leading to tighter supply and higher prices.
3. Weaker Dollar Index: The decline of the US Dollar in early 2025 has positively impacted all commodities, but silver—due to its stronger connections to industrial use—has experienced more significant price fluctuations.
4. Portfolio Diversification: As gold prices approach saturation at around ₹65,000–₹70,000 per 10 grams, silver presents a greater potential for appreciation per investment unit. Many retail investors consider silver to be a more accessible alternative to gold, with better prospects for growth.

The Volatility Trade-Off
However, silver’s outperformance does not come without risks. Historically, silver prices have shown more than double the volatility of gold. While gold tends to move steadily, silver is known for sharp price spikes and drawdowns. For instance, during the commodity market corrections of 2020 and 2022, silver prices dropped over 25% within weeks, compared to a 10–12% correction in gold.
Anand Rathi, who serves as a Senior Fund Manager at a prominent Asset Management Company, indicates that:
“Silver’s industrial demand makes it more cyclical and reactive to economic trends. That gives it a strong uptrend during economic expansions, but it also carries significant downside risk when sentiment reverses. It’s not for the faint-hearted.”
Investors looking to enter Silver ETFs are advised to assess their risk appetite, maintain a longer investment horizon, and consider staggered investing strategies, such as SIPs in silver-based mutual fund schemes or ETFs.

Regulatory Encouragement and Product Innovation
In 2022, the Securities and Exchange Board of India (SEBI) authorized the introduction of Silver ETFs. Since then, various offerings from prominent asset management companies, such as Nippon India Silver ETF, ICICI Prudential Silver ETF, HDFC Silver ETF, and Axis Silver ETF, have attracted significant interest. The regulatory push towards commodities-linked retail investments has widened participation and ensured better transparency in silver price tracking.
Innovative investment products such as Silver ETF Fund of Funds (FoFs) and ETF + Gold Combo Schemes are also helping investors blend stability and growth within their precious metal portfolio.

Expert Advice for Retail Investors
For Indian investors, silver continues to offer affordable entry points, with the minimum investment amount typically lower than gold ETFs, especially in SIP formats. However, experts advise limiting silver exposure to 10-15% of one’s commodity allocation as part of a well-diversified investment strategy.
Sonal Arora, a certified financial planner, recommends:
“Silver is a tactical allocation—not a core holding. Use it to boost returns when the economic cycle is in your favour, but always pair it with gold for stability.”

Conclusion: A Shiny 2025 for Silver, But Not Without Shadows
As of mid-2025, Silver ETFs are the outperformers in the Indian commodity ETF space, driven by industrial tailwinds, retail enthusiasm, and global macro support. The asset class is no longer just a speculative bet—it is emerging as a credible investment avenue, especially for those willing to weather its volatility.
While gold remains the go-to for capital preservation, silver is carving out its place as the “growth metal”. Investors need to proceed with caution, finding the appropriate equilibrium between risk and reward in their portfolio of precious metals.

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