Silver lining in 2025: Kotak MF, Aditya Birla AMC boost silver’s outlook for investment

With silver prices soaring over 60% year-to-date, fund houses such as Kotak Mutual Fund and Aditya Birla Capital AMC are turning increasingly bullish on the metal’s prospects. Even as markets witness short-term profit booking, analysts believe any correction could offer a golden opportunity to accumulate silver — a metal now seen as both an industrial powerhouse and a strategic hedge in turbulent times.

Silver’s 2025 rally

According to Kotak Mutual Fund, silver prices have surged nearly 69% so far this year, outperforming most asset classes. Despite some short-term volatility, the fund house believes a healthy price correction could serve as a buying opportunity for long-term investors.

“Silver’s global significance continues to grow due to its affordability, industrial demand, and role as a hedge during geopolitical and economic uncertainty,” the note stated.

A crisis hedge

Historically, silver has delivered stability and security when equity markets have faltered. Kotak Mutual Fund highlighted several major market events where silver outperformed equities:

Subprime Mortgage Crisis (2008–09): Nifty 50 TRI fell 54%, while silver gained 13%.

Covid-19 Crash (2020): Nifty 50 TRI declined 33%, silver corrected just 14%.

Russia-Ukraine Conflict (2022): Nifty 50 TRI dropped 10%, silver rose 12%.

Recent correction (2024–25): While Nifty fell 15%, silver increased 3%.

These patterns reinforce silver’s role as a non-correlated asset — one that cushions portfolios during downturns and provides diversification benefits over the long term.

Industrial demand and supply deficit

Beyond its investment appeal, silver’s industrial demand has hit record levels. Nearly 50% of global silver consumption now comes from sectors like solar panels, electric vehicles, and electronics. In 2024 alone, industrial demand reached 680.5 million ounces, the highest ever recorded.

Kotak noted that silver has been in a supply deficit for four consecutive years, with a projected 21% shortfall in 2025. This persistent imbalance between demand and supply continues to exert upward pressure on prices.

The Gold-Silver Ratio (GSR) — currently around 83:1 against a historical average of 60:1 — also makes silver comparatively more affordable than gold, enhancing its investment attractiveness.

Balanced portfolio strategy

Complementing Kotak’s bullish view on silver, Aditya Birla Capital AMC underscored the importance of strategic asset allocation in navigating current market conditions.

The AMC’s latest report suggests that India’s equity markets will remain resilient, supported by strong macro fundamentals, policy reforms, and steady earnings growth. Sectors like manufacturing, infrastructure, and financial services are expected to lead the next growth phase, while rising consumer demand and festive spending should bolster consumption trends.

However, the fund house cautioned that mid- and small-cap valuations appear stretched, recommending a balanced allocation across equities, debt, and commodities — including gold and silver ETFs — to mitigate risk.

Takeaway for investors

Both Kotak Mutual Fund and Aditya Birla AMC agree that precious metals, particularly silver, are emerging as crucial portfolio stabilizers amid market volatility.

Silver’s unique dual nature — as both a monetary hedge and an industrial growth driver — positions it as a versatile asset for long-term wealth creation.

For investors building diversified portfolios, adding silver through ETFs, sovereign bonds, or mutual funds can offer a prudent balance of growth, protection, and inflation hedging — especially as global economic uncertainty continues to linger.

Bottom Line

As India’s markets evolve and global headwinds persist, fund houses see silver as more than just a festive-season metal — it’s a strategic, long-term investment. Whether for wealth preservation or growth, 2025’s silver rally reaffirms one timeless truth: in uncertain times, silver truly shines.