Silver prices soar 48% in a year; experts weigh ETFs, coins, digital as best options

Silver has emerged as one of the most dynamic commodities this year, with prices rising by nearly 48% in the last 12 months. Silver delivered mixed returns in 2025: modest gains in January (0.11%) and February (5.65%), followed by a dip in March (3.61%) and April (-3.02%). Momentum picked up again in May (1.68%), while June marked the best performance so far with a 9.89% return. In July and August, silver rose by 4.51% and 1.30% respectively.

Notably, silver has outperformed gold in four of the first eight months of 2025, underscoring renewed investor appetite for the metal. Tata Mutual Fund attributes the rally to a combination of tight physical supply, reduced liquidity in the London bullion market, and strong industrial demand, particularly from China’s solar sector. “Silver has continued its strong upward trend since June, gaining fresh support from a multi-month breakout in gold,” the fund noted.

Ways to invest in silver

Tax advisory platform Tax Buddy outlined four primary ways to gain exposure to silver:

Silver ETFs: These funds trade on NSE and BSE and hold 99.9% purity silver bars. They have been among the strongest performers, offering average returns of 53.95% in 2025 so far, with top performers like HDFC Silver ETF FoF (54.57%) and SBI Silver ETF FoF (54.54%).

Physical Silver: Coins, bars, and jewellery remain a traditional route, though they involve GST of 3% and, in the case of jewellery, making charges.

Digital Silver: Offered by fintech platforms in fractional grams, stored in vaults. While convenient, it remains unregulated and relies on the provider’s buyback arrangements.

Taxation rules

Silver ETFs: Treated as financial securities. Gains after 12 months are taxed as long-term capital gains (LTCG) at 12.5%; shorter holding periods attract slab-rate taxation.

Physical and Digital Silver: Classified as commodities. Holding for 24 months or more qualifies for LTCG at 12.5%, while shorter durations are taxed as short-term gains.

Liquidity and storage

ETFs offer intraday liquidity and regulated custody, though investors should watch out for tracking errors and expense ratios.

Physical silver requires safe storage and purity checks.

Digital silver is stored by providers but carries operational and regulatory risks.

What Tata Mutual Fund’s report highlights

According to Tata Mutual Fund’s commodities outlook, silver has sustained its strong upward momentum since June, supported by a breakout in gold prices and tighter physical supplies. The report noted that shrinking liquidity in the London market has further fuelled the recent bull run in silver.

The fund also flagged global trade concerns, pointing to the US administration’s move last month to impose a 50% tariff on copper. This, it said, has raised fears that similar measures could be extended to silver. Although prices have eased slightly since then, they remain well above levels seen in recent years.

In addition, Tata Mutual Fund highlighted that August gains were underpinned by constrained supply and robust industrial demand, particularly from China’s rapidly expanding solar sector.

Silver vs. gold

While silver ETFs have outpaced gold ETFs this year (54% vs. 48% average returns), gold remains the more reliable crisis hedge. Analysts caution that silver is more volatile and tends to fall during equity market downturns, limiting its use as a defensive asset. Moreover, silver does not generate income, making it less suitable for investors seeking steady cash flows.

Top 3 Silver ETFs - 3 Months
1. ICICI Prudential Silver ETF       - 29.77%
2. Aditya Birla Sun Life Silver ETF  - 29.74%
3. Kotak Silver ETF                  - 29.69%

Top 3 Silver ETFs - 6 Months
1. ICICI Prudential Silver ETF       - 39.51%
2. Aditya Birla Sun Life Silver ETF  - 39.50%
3. Axis Silver ETF                   - 39.41%

Top 3 Silver ETFs - 1 Year
1. Aditya Birla Sun Life Silver ETF  - 49.80%
2. Axis Silver ETF                   - 49.68%
3. Kotak Silver ETF                  - 49.63%

Top 3 Silver ETFs - 3 Years
1. ICICI Prudential Silver ETF       - 33.59%
2. Aditya Birla Sun Life Silver ETF  - 33.53%
3. Nippon India Silver ETF           - 33.50%

Source: Value Research

Tactical or long-term bet?

Experts suggest silver should not be a core portfolio holding. Instead, it is better suited for tactical allocation or thematic plays, particularly for investors betting on industrial demand from sectors like electronics and solar energy. Experts say before adding any asset to your portfolio, it must serve a clear purpose. For most investors, silver works best as a satellite holding rather than a core allocation.

In summary, silver’s stellar rally in 2025 makes it an attractive short-term opportunity, especially through ETFs. But for long-term stability and diversification, investors may be better off treating silver as a tactical bet, while relying on gold and other assets for core portfolio roles.