Silver up 91% in 2025, outshines equities as demand from EVs, solar soars

Gold funds are up 65 per cent so far this year; silver funds have surged nearly 95 per cent.

After years of being viewed largely as gold’s lower-profile cousin, silver is staging a powerful re-entry into long-term portfolio strategy. A combination of tight global supply, booming industrial demand from renewable energy and EVs, and rising investor participation through ETFs is turning silver into one of the most structurally interesting commodities in global markets.

 

These trends form the underlying investment case for the newly launched Edelweiss Silver ETF Fund of Fund (FoF), whose New Fund Offer (NFO) opens between December 8 and December 22, 2025, giving Indian investors a low-cost, digital route to participate in the metal’s evolving demand-supply cycle. 

 

Why silver is no longer just a “store of value” metal

 

Traditionally, silver was considered primarily as:

• A hedge against currency volatility
• A diversifier alongside gold
• A cyclical precious metal investment

 

While these roles remain intact, the Edelweiss presentation highlights a deeper transformation: silver is now increasingly an industrial growth metal.

 

According to the data:

58% of global silver demand now comes from industrial applications

 

Within this:

• 39% is electrical usage
• 29% from photovoltaic (solar) applications
• 8% from brazing
• The balance from other industrial uses

• Jewellery accounts for 18%
• Investment demand contributes 17% of total consumption 

 

This shift is being driven by:

•  
• The global solar energy transition
• Rapid growth in EVs and electronics
• Expanding use in medical technology
• Supply is tight—and structurally inflexible

On the supply side, the challenge is structural. Silver is not primarily mined as a standalone metal.

 

Global supply stands at about 1,015 million ounces (Moz), with:

 

• 81% from mine production
• 19% from recycling

 

Among mined output:

 

• 30% comes as a by-product of lead and zinc
• 26% from copper
• 17% from gold
• Only 27% from primary silver mining 

 

This means silver supply cannot be ramped up easily even when prices rise, because production depends on the economics of other metals. This structural rigidity is at the heart of silver’s repeated supply-deficit cycles.

 

Silver has stayed in deficit for multiple years

 

The Metals Focus data presented by Edelweiss shows a persistent demand-supply gap in recent years:

 

The silver market saw deep deficits between 2021 and 2024, with shortfalls ranging from 118 Moz to over 264 Moz

Even in 2025 (forecast), the market remains in deficit

During this deficit phase, silver prices have climbed sharply, reflecting the stress between consumption and output 

 

Crucially, the presentation points out that:

 

“What once was an investment-driven story is now being powered mainly by rising industrial consumption.”

 

This fundamentally changes the long-term price support structure for silver compared with past commodity cycles.

 

How silver behaves inside a diversified portfolio

 

From a wealth-management lens, perhaps the most important insight from the presentation is how silver behaves when blended with equities.

 

Using domestic silver prices and Nifty 500 TRI data (as of November 30, 2025), Edelweiss shows:

 

• In 6 of the last 10 calendar years, a portfolio with 90% equity + 10% silver outperformed pure equity
• In 9 of those 10 years, volatility was lower than equity-only portfolios

In 6 of the last 10 calendar years, a portfolio with silver outperformed pure equity, and in 9 of those years, it had lower volatility 

Source: Internal Analysis, MCX, AceMF. Data as on 30th November 2025. Past performance may or may not be sustained in the future.

   

 

Silver vs Equity across calendar years

 

This highlights silver’s role not as a core holding—but as a “satellite asset” that improves:

 

• Risk-adjusted returns
• Portfolio stability during equity volatility
• Protection during macro stress phases
• The gold-silver ratio is normalising
• Another major valuation indicator is the gold-silver ratio, which measures how many ounces of silver equal one ounce of gold.
• The long-term average ratio stands near 69
• As of November 2025, the ratio is moving back toward this historical mean, suggesting that silver is no longer deeply undervalued relative to gold, but also not excessively overheated 

Gold-Silver ratio: Returning to long-term average

For asset allocators, this normalisation typically signals:

 

• A more stable relative pricing zone
• Reduced extreme divergence risk between gold and silver

 

Why Silver ETF FoFs are gaining traction with investors

 

• Directly buying and storing physical silver comes with:
• Storage risk
• Insurance cost
• Purity concerns
• Liquidity friction

 

To solve these issues, the Edelweiss Silver ETF Fund of Fund offers a digital, demat-linked ownership structure, where the FoF invests 95%–100% in Edelweiss Silver ETF units, which in turn track LBMA daily spot silver prices.

 

Key features include:

 

• 99.9% purity price tracking
• Daily liquidity like mutual funds
• No physical storage or safety concern
• Minimum investment of ₹100
• Exit load of 0.10% for redemptions within 15 days; nil thereafter 

 

This structure allows even first-time investors to take calibrated exposure to silver without operational friction.

 

But the risk profile remains high

 

Edelweiss clearly flags that:

 

• The scheme risk is rated “Very High”
• Silver prices remain influenced by:
• Global interest rate cycles
• Dollar movements
• Industrial growth momentum

 

Commodity fund flows

 

While diversification benefits exist, silver should be used:

 

• As a tactical or satellite allocation
• Not as a replacement for equity, debt or core gold exposure 

 

Should you invest?

 

"The growing popularity of gold and silver ETFs shouldn't be mistaken for a sign to hoard them blindly. Instead, investors should ask: What role do these assets play in my portfolio?

 

Historically, precious metals have served as:

 

Diversifiers: Gold and silver historically show low correlation to equities, making them useful for reducing portfolio risk.

 

Hedges: Precious metals perform better during inflationary periods or when geopolitical risks rise.

 

However, they are not primary wealth creators. Over long periods, equities have outperformed precious metals. For instance, over the past decade, gold has delivered annualised returns of around 7-8 per cent, while Indian equity markets (such as the Nifty 50) returned closer to 12-14 per cent," said Karthik Anand Vijay of Value Research. 

 

Value Research has the following advice for investors:  

Investors should add silver only as a tactical diversifier, as it offers strong bursts during industrial cycles.  Keep gold and silver within 10 per cent of your portfolio.  

If you're considering adding gold or silver ETFs to your portfolio, keep these points in mind:

 

Match your allocation to your goals: Most investors don't need more than 5-10 per cent of their portfolio in precious metals. Their main role is to provide stability, not growth.

Compare costs and liquidity: Look beyond brand names. Examine the ETF's liquidity, impact costs, expense ratios and tracking errors before investing.

 

Think long term: Don't make decisions based solely on festive hype or short-term market momentum. Gold and silver work best in a carefully planned, diversified portfolio.