Why is silver a compelling investment now? An ICICI Pru expert explains

Kolkata: People have long regarded silver as playing second fiddle to gold. But now some experts have started rating silver as the new gold. While the safe haven appeal of silver has sustained, rising industrial demand and supply constraints are lending a brighter polish to the white metal.

ICICI Prudential AMC principal, investment strategy, Chintan Haria points out that the prospect of silver is becoming brighter on several fronts -- the uncertainty in the equity market, the rising demand from new age industrial domains, the supply constraints and favourable valuations.

Hedge and demand-supply mismatch

"Silver acts as a hedge against inflation. A perpetual demand-supply mismatch leads to price resilience. Given that silver caters a variety of traditional and fast-growing new-age industries, the prospects for the metal's demand are likely to remain robust. Its performance over the years has been healthy and has delivered more than debt instruments on a consistent basis," points out Haria. "Another key aspect to note is the current relative undervaluation that silver trades at going by the gold-silver ratio. The US Fed indicating two more rate cuts later in the year is another positive for silver," he adds.

Trade-related uncertainty

Haria makes a point that diversifying into commodities can be a prudent step for investors in choppy markets. "With the US levying 25% tariffs (even as trade negotiations continue) on India and penalties for buying Russian oil have brought in macro challenges. With revised US jobs data being a lot worse than imagined, there are added economic uncertainties," he remarks.

Demand-supply mismatch: Silver is produced predominantly by mining and recycling. Since 2021, the global supply of silver has not been able to keep up to the demand. Haria draws optimism from the fact that the demand for silver in 2024 was 1164.1 million ounces, while the supply was only 1015.1 million ounces, as stated in the Silver Institute's 2025 survey report. This year, demand could be 1148.3 million ounces, while supply can languish at 1030.6 million ounces.

Enticing valuations: Gold-to-silver ratio (how many units of silver is needed to buy one unit of gold). Higher the ratio, the more undervalued silver is. This ratio was 65-70 in 2020-21 and it has risen to over 90 on August 4, 2025, points outr Haria. "This clearly signals a relatively undervalued silver vis-à-vis gold, making silver an attractive proposition," he remarked.

Demand in industries: New age industrial sectors such as electric vehicles, green energy, 5G telecommunication networks, bio pharma and medical segments, clean energy & power generation are tuirning out to be major users of silver, which will keep demand high. Traditional sectors such as mirrors, solar panels, automobiles and industrial batteries also need this metal.

Economic uncertainty: "The US Federal Reserve started on an easing path late last year. However, while striking deals with some countries, the US has levied trade tariffs on others, and the Federal Reserve has gone slow on rate decreases. A couple of cuts are still expected over the course of the year. The continuing geopolitical tensions in Russia-Ukraine being played out currently, mean result and higher inflation in the US could mean economic uncertainty. Silver could gain from this volatile global market," says Haria.

The ICICI Pru expert also detailed how silver fared against equities in a 15-year span. "Over the past 15 calendar years (2010-2024), silver has delivered higher returns than the Nifty 50 TRI in as many as seven years," he said. For evidence, he referred to the following data sheet comparing returns generated by silver on MCX and Nifty 50 TRI between 2010 and 2024.

Silver vs Nifty 50 TRI

2010

MCX Silver: 71.4%

Nifty 50 TRI: 19.2%

2011

MCX Silver: 8.6%

Nifty 50 TRI: -23.8%

2012

MCX Silver:13.5%

Nifty 50 TRI: 29.4%

2013

MCX Silver: -23.5%

Nifty 50 TRI: 8.1%

2014

MCX Silver: -15.9%

Nifty 50 TRI: 32.9%

2015

MCX Silver: -9.7%

Nifty 50 TRI: -3.0%

2016

MCX Silver: 19.6%

Nifty 50 TRI: 4.4%

2017

MCX Silver: -2.8%

Nifty 50 TRI:30.3%

2018

MCX Silver: -0.2%

Nifty 50 TRI: 4.6%

2019

MCX Silver: 21.8%

Nifty 50 TRI:13.5%

2020

MCX Silver: 44.4%

Nifty 50 TRI: 16.1%

2021

MCX Silver: -8.2%

Nifty 50 TRI: 25.6%

2022

MCX Silver: 9.7%

Nifty 50 TRI: 5.7%

2023

MCX Silver: 7.7%

Nifty 50 TRI: 21.3%

2024

MCX Silver: 17.6%

Nifty 50 TRI:10.1%

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"Since silver has no correlation to equities, it has occasionally tended to do better than equities during periods of global uncertainty, thus making for healthy portfolio diversification," he remarked.

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