Silver surges ahead: Can the white metal outshine gold in India’s bullion boom?
Now, silver is stepping into the spotlight, driven by a potent mix of industrial demand, investment flows, currency dynamics, and seasonal buying.
From steady to soaring: silver’s meteoric rise
Historically, silver has played second fiddle to gold in India’s bullion market, often seen as a more affordable alternative. However, 2025 has rewritten that narrative. While gold has gained approximately 49% year-to-date, silver has outpaced it with a 53% rise.
This performance reflects not only investor sentiment but also structural shifts in demand and supply.
Silver’s dual role—as a precious metal and an industrial commodity—positions it to benefit from both safe-haven buying and technological advancements. Demand from sectors such as solar energy, electric vehicles (EVs), electronics, and AI infrastructure has created a robust tailwind for silver.
Industrial demand and supply deficit: a bullish setup
According to the Silver Institute, global silver industrial fabrication is expected to surpass 700 million ounces in 2025, marking a new record. This growth is fueled by green economy applications, including photovoltaics and EVs, as well as consumer electronics. Meanwhile, silver supply remains constrained, with the market forecast to remain in deficit for the fifth consecutive year.
India, as a major silver consumer, is feeling the impact of this imbalance. Despite increased recycling and global mine output, tight supply and rising industrial demand have pushed domestic prices higher.
The INR factor: currency weakness amplifies the rally
A key driver of silver’s domestic price surge has been the weakening Indian Rupee (INR). As silver is largely imported, a depreciating rupee makes the metal more expensive for Indian buyers. This currency effect has amplified the global rally in silver prices, pushing them even higher in local markets.
The INR’s slide against the US dollar has coincided with global economic uncertainties, trade tensions, and expectations of US Federal Reserve interest rate cuts. These macroeconomic factors have increased silver’s appeal as a hedge against inflation and currency devaluation.
Festive season tailwinds: silver shines brighter than gold
Traditionally, gold dominates festive and wedding season purchases in India. However, this year, silver is likely to steal the show as consumers flocked to buy silver coins, idols, and utensils, driven by affordability and investment potential.
The festive season of 2025, including Navratri, Pooja, and Diwali, is expected to further boost silver demand. With gold prices hovering above Rs 1.15 lakh per 10 grams, many buyers are turning to silver as a cost-effective alternative.
Investor sentiment: silver ETFs and retail participation surge
Silver’s investment appeal has grown significantly in 2025. Silver ETFs have seen massive inflows, reportedly tripling those of gold ETFs. Retail investors increasingly view silver as a high-growth asset, especially given its lower entry cost and potential for outsized returns.
The narrowing gold-silver ratio—once as high as 80:1, now approaching 60:1—suggests silver may still be undervalued relative to gold. This has led to strategic buying among investors anticipating further upside.
Can silver sustain its momentum?
While silver’s rally is impressive, it’s not without risks. Technical indicators suggest overbought conditions, and any reversal in global economic sentiment or INR strength could trigger corrections. However, the fundamental drivers—industrial demand, supply deficit, festive buying, and currency weakness—remain intact.
Moreover, silver’s versatility across industries and its growing role in clean energy and digital infrastructure make it a compelling long-term investment. As India continues embracing renewable technologies and digital transformation, silver’s relevance will only grow.
Silver’s recent performance signals a paradigm shift in India’s bullion market. No longer just a cheaper cousin to gold, silver is emerging as a strategic asset with strong industrial and investment credentials. With prices hovering near Rs 1.40 lakh/kg and festive demand heating up, silver could very well outperform gold in the near term.
(The author, Hareesh V is the Head of Commodity Research at Geojit Investments)
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)