Looking for 15-20% returns? Silver is the new gold. Experts explain why

Business Standard

3 days ago

In a world increasingly defined by tech innovation, energy transition, and geopolitical uncertainty, silver is fast emerging as the new gold for investors seeking both resilience and returns. A new report by wealth advisory firm Client Associates, managing over $6.1 billion in assets, presents a strong case for silver as a strategic, dual-role investment asset that could deliver 15–20% returns in the next 12–24 months.
Why Silver?
Unlike gold, which is seen largely as a hedge against inflation and volatility, silver combines monetary value with industrial utility. According to the report, silver demand is surging from high-growth sectors like:
Solar energy and green infrastructure
Electric vehicles (EVs)
Semiconductors and 5G
At the same time, mining and recycling supply remains constrained, causing a global supply deficit for the fourth year in a row—to the tune of 149 million ounces in 2024 alone.
Silver currently trades at a gold-silver ratio of 90, compared to the long-term average of 68. This makes silver appear undervalued, especially if gold prices stabilize. Over time, silver has shown low correlation with Indian equities (0.21 with Sensex) and moderate correlation with gold (0.72), helping balance risk in diversified portfolios.
"Silver is no longer just a precious metal—it is a modern asset class," says Nitin Aggarwal, Director – Investment Research at Client Associates. "It brings together industrial relevance and historical trust to offer a compelling dual advantage.'
The Investment Case for Silver
Silver's unique market dynamics, risk profile, and investment potential
Supply Dynamics
• Despite a 1.7% year-on-year increase in global silver supply to 1,015.1 million ounces (Moz) in 2024, the total demand, which stood at 1,160.1 Moz, resulted in a supply deficit of approximately 149 Moz (about 15% of total supply). This marked the fourth consecutive year of a silver market shortage.
• As a result, silver prices are being supported by strong structural tailwinds, driven by rising demand from new-age sectors - such as solar energy, electric vehicles, & electronics with amidst a deficit supply
Demand Dynamics
• In 2024, total silver demand declined by 2.8% year-on-year. This decline was primarily driven by weakness in net physical investment, silverware, and photographic applications.
• However, the industrial demand (electrical & electronics, brazing alloys & solders, and other industrials) increased by 3.6% y-o-y, marking the fourth consecutive year of record highs and providing strong support to silver prices. Over the long term, global silver demand has grown at a CAGR of around 2% from 2016 to 2024.
Client Associates also highlights silver's role as an effective portfolio diversifier. It has low correlation with Indian equities (0.21 with the Sensex) and a moderate correlation with gold (0.72), allowing it to complement both equity-heavy and gold-heavy portfolios. Over longer horizons, gold and silver returns tend to converge, but silver offers higher short-term return potential—albeit with greater volatility and sharper drawdowns. From a portfolio construction standpoint, silver can play both a defensive and opportunistic role. While gold remains a preferred hedge in uncertain times, silver's linkage with industrial growth makes it well-suited for tactical allocations aligned with long-term global themes like decarbonization, digitalisation, and infrastructure upgrades.
Risks to Watch
The silver story isn't without caveats. The report warns investors of:
Potential increase in mining output, which could ease the supply crunch
Global slowdown that could reduce industrial demand
Material substitution in key industries like electronics and solar
How to Invest in Silver
Depending on investment goals and logistics, here are viable options:
Silver ETFs: Great for short-term tactical plays; Demat required
Silver ETF Fund-of-Funds (FoFs): Better for long-term passive investors; no Demat needed
For investors with Demat accounts and shorter investment horizons, Silver ETFs are a cost-efficient and tax- advantaged route.
For Indian investors building a goal-linked portfolio, silver can serve as a growth-hedge hybrid—especially relevant in a world that is digital, decarbonized, and geopolitically unpredictable.
From a portfolio construction standpoint, silver can play both a defensive and opportunistic role.
Why Silver Deserves a Place in Your Portfolio
15–20% return potential in 1–2 years
Structural supply deficit + industrial demand boom
Diversifies equity and gold-heavy portfolios
Ideal for both short-term and long-term allocations
Over longer horizons, gold and silver returns tend to converge, but silver offers higher short-term return potential—albeit with greater volatility and sharper drawdowns.