'New investors should enter gradually and stay cautious.'
'Silver is a structural multi-year story, but timing matters in a high-volatility metal.'
Silver's scorching rally shows no signs of cooling in 2025, with its price crossing the ₹2 lakh per kg mark in the domestic market. This precious metal has delivered a return of 123 per cent year-to-date.
"Lower global yields, rising recession fears, and renewed safe-haven demand boosted all precious metals. But silver outperformed because it is both a macro hedge and a high-growth industrial metal," says Niranjan Avasthi, senior vice-president, Edelweiss Mutual Fund.
After such a strong run, the key question for investors is whether silver can continue to reward them in 2026.
Favourable demand-supply dynamics
The outlook remains favourable, underpinned by rising industrial usage and sustained investment demand.
"The bull run can extend because silver sits at the centre of three unstoppable megatrends -- solar photovoltaic growing at 15 to 20 per cent compound annual growth rate (CAGR), electric vehicles (EVs) at 10 to 15 per cent CAGR, and global artificial intelligence infrastructure scaling exponentially," says Avasthi.
On the supply side, mining output has remained muted, and recycling growth has been limited. "Silver supply has remained tight for the past three to four years and is expected to stay constrained. Few new silver mines are being discovered, while the quality of existing ores is declining," says Satish Dondapati, fund manager (ETF), Kotak Mutual Fund.
Supportive interest-rate environment
A low-interest-rate environment globally tends to support precious metals.
"Expectations of more aggressive interest rate cuts may also push silver prices higher. Historically, silver prices trade at around 1.8 per cent of gold prices, but currently they are close to 1.44 per cent. This suggests silver has room to move higher," says Dondapati.
Do not ignore risks
After a strong show in 2025, changing commodity market dynamics could test silver's momentum.
"Silver's rally could cool if the dollar strengthens again and real rates rise," says Avasthi.
"A reduction in geopolitical tensions would reduce safe-haven buying," says Dondapati. Investors, therefore, should not expect a repeat of the outsized returns seen in 2025.
Brace for volatility
Silver tends to be more volatile than gold due to its dual nature.
"Silver prices may remain volatile, particularly in the near term. Long-term investors should consider staggered or phased investments rather than lump-sum allocations," says Vikram Dhawan, head, commodities and fund manager, Nippon India Mutual Fund.
Allocation discipline is key
New investors should avoid chasing past returns.
"Investors are advised to exercise caution in making large lump-sum allocations to silver at current levels. Instead, a phased investment approach through SIPs (systematic investment plans) or STPs (systematic transfer plans) in silver ETFs (exchange-traded funds) or mutual funds is recommended," says Dondapati.
"Overall, precious metals exposure should be capped at around 15 to 20 per cent of the portfolio," adds Donda[ati.
"New investors should enter gradually and stay cautious. Silver is a structural multi-year story, but timing matters in a high-volatility metal," says Avasthi.
Those with excessive allocation may consider partial profit booking.
"Existing investors should stay invested as the long-term industrial super-cycle remains intact, but rebalancing on sharp spikes may be wise," says Avasthi.
Investors with low or moderate risk-taking ability should avoid silver ETFs or funds and instead take diversified exposure through multi-asset allocation funds.
"Multi-asset allocation funds offer a diversified and professionally managed way to gain exposure to gold, silver, and other asset classes within a single framework," says Dhawan.
"Such funds are generally suitable for investors seeking balanced exposure and risk management," adds Dhawan.
Aggressive investors may consider adding dedicated silver ETFs or funds of funds, provided this fits within their broader portfolio strategy and risk profile.
Disclaimer: This article is meant for information purposes only. This article and information do not constitute a distribution, an endorsement, an investment advice, an offer to buy or sell or the solicitation of an offer to buy or sell any securities/schemes or any other financial products/investment products mentioned in this article to influence the opinion or behaviour of the investors/recipients.
Any use of the information/any investment and investment related decisions of the investors/recipients are at their sole discretion and risk. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Opinions expressed herein are subject to change without notice.
© 2026