Mrin Agarwal Financial Educator & Founder, Finsafe India Pvt Ltd
Silver took centre stage in 2025 with 150% returns, outpacing gold and equities. The rally was driven by a sustained supply squeeze due to structural pressures like ongoing supply deficits, declining global inventories and steady industrial demand led by solar panels, electric vehicles, and data centres. Stockpiling by ETF investors amplified the rally furthur.
With these stupendous returns, investor interest in silver has spiked. Return predictions of 20% to 60% in 2026 are doing the rounds, driven by news of heightened industrial demand and constrained supply, which is being further fuelled by China’s silver export restrictions and US declaring silver as a critical mineral. Despite these triggers, it is important for investors to tread cautiously.
This is because silver firstly does not generate cash flows and secondly this level of prices may be untenable for industrial use. Markets driven by scarcity rather than equilibrium can remain elevated longer than expected, but they are also prone to sharp corrections. As per data from FundsIndia, since 1971, silver has had upcycles lasting 8-10 years followed by downcycles of 7-10 years. The current upcycle phase has been for 6.4 years.
On a 10-year rolling return basis, in the last 50 years, silver has underperformed gold and equities 80% of the time. Silver is also more volatile than gold and equities. Given all this data, silver can at best be a tactical allocation which needs to be monitored carefully for timely exit.
What should investors do?
Investors who have missed the silver rally and now want to catchup should keep in mind that an asset with 150% recent performance will be extremely volatile in the near future. Deep corrections are possible given the overbought conditions and stretched valuations.
Investors need to assess their stance in case of a significant and prolonged fall. Can they hold until the performance recovers? For example, between 2002-2012, gold was on an upward trajectory. But from 2013-2019, gold was stagnant and only started recovering from 2020 onwards. Somebody who bought gold in 2012 had to wait for 10 years to get good returns.
Investors must be mindful that by the time an investment is hot, the easy returns are often gone. And when all and sundry start giving returns predictions, it is time to be cautious.
Investors should rely on research, not noise as research beats predictions anyday! Investors also need to pare their returns expectations to average returns from silver, which are 9-10% per annum on a long term basis.
Individuals should evaluate where silver would fit in their portfolio. Can it be used for any financial goals? At best, it is a tactical allocation and certainly not a core allocation. Hence having an exit strategy in mind, with clear profit booking triggers would be prudent. Because, trends reward timing, not enthusiasm!
Happy Investing in 2026!