Silver hits Rs 2 lakh/kg record: Axis Securities sees upside to Rs 2.4 lakh; what lies ahead

Silver prices smashed a historic Rs 2 lakh/kg on MCX Friday, riding FOMC gains into 2026. Axis Mutual Fund flags risks from overvaluation—like weak physical demand, ETF outflows, and profit-taking—but keeps a constructive outlook. Corrections loom as valuations stretch, yet multiple tailwinds sustain the rally.

Axis Securities spots more upside: dips to Rs 1.7-1.78 lakh offer staggered buys, targeting Rs 2.4 lakh in 2026. Silver's broken a multi-year consolidation via a "massive 'Rounding Bottom breakout formation'" from 2011-2025 on monthly charts. Technicals glow—20-month and 60-month EMAs slope higher, with prices far above, signaling early-cycle strength.

Risks persist: stronger US dollar, rising real yields, easing geopolitics, copper slumps, or rotations to energy/agri commodities. Central banks favor gold, curbing official demand, while industrial substitution looms. Still, 2025 locked silver's dual precious-industrial shine in portfolios.

Drivers echo gold: weaker dollar, Fed uncertainty, geopolitics, economic woes, Japanese bond chaos. Metals momentum, industrial surge, flow shifts, and shortages fueled it—copper highs crossed into demand, gold gains added lift.

Industrial use devours over 50% of consumption: solar tech, EV batteries, semiconductors—all green-transition stars. Solar PV demand doubled from 94.4 Moz (2020) to 243.7 Moz (2024), claiming 21% of total. ETFs poured in, physical buys steadied prices, equity rotations accelerated momentum.

Fundamentals scream repricing: silver decouples from gold, with the Gold/Silver Ratio crashing from 105 to below 70. "A critical development in late 2024 and throughout 2025 has been the collapse of the Gold/Silver Ratio (Historically serving as a barometer for risk appetite, the ratio has compressed significantly, falling from highs near 105 to current levels below 70," Axis Securities said.

Supply is inelastic—mostly by-product of lead, zinc, and copper mining. 2025 is the fifth straight deficit year.

Gold holds firm via central bank buys and safe-haven appeal, though volatile. “However, in the near term, we have a positive bias on gold, supported by safe haven flows given the backdrop of global uncertainty,” the note said.

“As we enter 2026, many of the drivers that fuelled gold’s rally in 2025 may continue to provide support, however investors need to be mindful of potential headwinds that may temper the momentum. Higher real yields, a stronger US dollar, higher global growth, reduced inflationary pressures, and hawkish US policy stance may erode demand. Additionally, profit-taking, weaker ETF inflows, commodity rotation into industrial metals and easing geopolitical risks could also weigh on the prices.”

Silver's structural bull run beckons—buy dips wisely.

Investing in Silver ETFs

Silver-linked funds have delivered exceptionally strong returns, driven by a sharp rally in global silver prices, supported by industrial demand (solar, EVs), supply constraints and safe-haven buying. Since these funds track silver prices, portfolio construction is largely similar, with most ETFs holding physical silver or silver-backed instruments, and FoFs investing in overseas silver ETFs.

Risk & NAV Behaviour

Silver funds carry high volatility risk, as NAVs move directly with global silver prices and currency fluctuations. Short-term drawdowns can be sharp, but long-term returns benefit from commodity cycles. NAV movements have been steep over the last year, reflecting strong momentum rather than gradual compounding.

Top 5 Performing Funds
6-Month Returns

Tata Silver ETF – 85.72%

ICICI Prudential Silver ETF – 82.37%

DSP Silver ETF – 82.27%

Aditya Birla Sun Life Silver ETF – 82.14%

Kotak Silver ETF – 82.08%

1-Year Returns

Tata Silver ETF – 107.03%

UTI Silver ETF – 106.51%

HDFC Silver ETF – 104.67%

ICICI Prudential Silver ETF – 103.50%

DSP Silver ETF – 103.34%

3-Year Returns

HDFC Silver ETF FoF (Direct Plan) – 40.24% CAGR

ICICI Prudential Silver ETF FoF (Direct Plan) – 40.24% CAGR

Aditya Birla Sun Life Silver ETF FoF (Direct Plan) – 40.23% CAGR

Nippon India Silver ETF FoF (Direct Plan) – 40.19% CAGR

Axis Silver ETF – 39.91% CAGR