Indian investors flock to silver as returns overtake those from gold
Imports fill most of the demand in the world's largest consumer of silver, where domestic prices touched a record high of 114,875 rupees ($1,336) a kg as a production shortfall spurred investors' hopes for a further rally.
"Gold's done pretty well for me over the last couple of years," said Umesh Agarwal, a regular buyer of gold coins, who recently made his first purchase of a one-kilogram bar of silver.
"Now I'm hoping silver follows the same path and gives similar returns."
Domestic prices of silver have risen 21% in the past three months, outstripping a rise of 5% in gold, as opposed to the scenario of the past year, when gold prices surged 34%, compared to a rise of 23% in silver.
The appetite for silver is driven both by investment and industry needs in areas such as solar energy and electric vehicles, outpacing production, said Chirag Thakkar, chief executive of Amrapali Group Gujarat, a leading silver importer.
"Usually, investors cash in when prices hit record highs, offloading coins and bars or pulling out of exchange-traded funds (ETFs)," he added.
"However, this time, even at record highs, people are investing, rather than selling."
Silver ETFs attracted inflows of a record 20.04 billion rupees in June, up from 8.53 billion in May, data from the Association of Mutual Funds in India showed.
In the June quarter, silver ETFs attracted inflows of 39.25 billion rupees, far outpacing the 23.67 billion flowing into gold ETFs.
Such ETFs offer investors a convenient way to gain exposure to silver, which is heavy and costly to store and transport, said Vikram Dhawan, head of commodities and fund manager at Nippon India Mutual Fund, which manages metal ETFs.
Volatility in equity markets following U.S. President Donald Trump's tariffs has also pushed investors to diversify, said a Mumbai-based bullion dealer with a silver importing bank.
Traditionally the choice of budget-conscious rural consumers, silver is increasingly attracting urban buyers as an investment, the dealer added.
Indian retail investment demand rose 7% in the first half of 2025 on the year, fuelled by expectations of a price rally, the Silver Institute said this month.
Silver imports jumped 431% in May on the year to 544.1 tons, while gold imports fell 25% to 30.5 tons, trade ministry data showed.
($1=85.9780 Indian rupees)
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