Copyright © HT Digital Streams Limit all rights reserved. How silver can fit into your precious metal strategy, a mixture of industrial demand, secure buying and persistent supply deficits fueled Silver’s rally. (Photo: Pixabay) Summary Silver delivered stronger yields than gold, but the volatility of the white metal is not always easy. Gold has kept the spotlight for a long time, but Silver is quietly carving out his moment and striving for investors with its strong returns and increasing industrial demand. Over the past year, silver funds have risen about 77% on average and increased by 35% over three years, with the exceeding of gold funds, yielded by 61% and 32% respectively. A mix of industrial demand, secure buying and persistent supply deficits fueled the rally. The growing use of silver in electric vehicles, solar panels and electronics, together with disruptions at large copper mines where it is produced as a by -product, has tightened the supply. Last week, the boom in prices printed the funds of funds of various funds to trade against premiums of up to 18%, compared to their indicative net asset values (Inav’s), which reflects the real value of the silver held in the fund. In simple terms, investors paid more than the underlying silver was officially worth because of the supply restrictions. Fund managers see room for further medium term profits, but warns that the volatility of the metal and dependence on industrial demand makes it a difficult bet for investors who are chasing recent returns. Double managers Silver prices are powered by two most important factors: demand for safe haven and industrial use. According to Vikram Dhawan, fund manager, commodities, Nippon Life India Asset Management, about two-thirds of the silver question comes from his industrial use and are a third for ornaments, small pubs, coins or investment demand. The metal tends to follow gold during periods of global uncertainty, thanks to the safe appeal. At the same time, it benefits when industrial demand exceeds supply, giving it a unique double role in the market. ‘The demand for silver has increased significantly. Silver is a by-product of copper and zinc mining. If there are supply shortages or disruptions in such mines, it will also lead to silver deficit ‘, “says Manav Modi, analyst, precious metal research, Motilal Oswal Financial Services. “On the other hand, the question remains strong for silver as a use case in electric vehicles, solar panels, green technology. Silver remains in deficiency compared to demand, and that was the fifth year of deficiency,” he added. Silver stock was disrupted after two important copper mines – where silver is produced as a by -product (only 30% of the silver is obtained from silver mines; rest from copper, zinc and gold mines) – were forced to close after serious accidents. At the same time, demand from sectors such as semiconductors, electronics, healthcare and telecommunications. Much of this question is commendable, which means it does not fall, even as prices rise. “The demand for silver is inelastic, which means that the portion of the silver used in goods such as solar panels or electric vehicles is minimal, a 20-30% increase in the price of the metal, it is unlikely to replace its demand. An EV uses about 50-60 grams of silver. Although the silver prices are unlikely to stop using silver.” Ghelani added that geopolitical tension, tariff disputes and continuous conflicts in the Middle East and Europe increased the risk premium of silver, as the metal acts as a safe haven during times of global uncertainty. This premium is further supported by a narrow supply situation in the global silver market. ‘The offer remains now because the global silver mining production has not grown much, which is positive for silver prices. Noteworthy, less than 30% of the silver comes from exclusive silver mines, while the rest comes as a by -product of base metals and gold mining, ‘says an MF report. Another senior executive of a fund home noted that the current phase of uncertainty, combined with Silver’s strategic importance, has led some central banks to strengthen their silver reserves along with gold. “Saudi Central Bank and Russia both started silver buying programs,” he said. The US has also added silver to its list of critical minerals, which underlines its strategic importance. Note amid the rally that Ghelani said, unlike gold, is silver more volatile because it is influenced by several factors. Thus, as a global tension and comfortable comfort ease, silver can lose its risk premium as a safe haven. “If there is a slowdown in the overall industrial activity, silver prices may have an impact.” However, the supply situation can also improve. “With high prices of gold, silver and copper, the supply will increase, and we expect the supply shortage to reduce in 2026,” the Axis MF report highlighted. “If the wrong question that is wrong facilitates, there may be some correction in the prices. But until the most important broad perspective remains intact in terms of secure purchase and supply challenges due to mining disruptions, silver can act again after a temporary correction,” Modi said. That said, if subsidies for Green Technologies in large markets, such as the US or China, are reduced, it could have a counter -wind in the short term, Dhawan warned. ‘But fundamentally silver remains a healthy story. Investors must have at least a three -year -old horizon and focus on allocation rather than timing. ‘ However, not everyone is convinced of Silver’s value as a portfolio diversifier. “Silver’s double identity-part precious metal, partial industrial commodity-making it an interesting asset. However, long-term historical data indicates that Silver does not improve the returns or offer a strong hedging over longer periods,” says Arun Kumar, Head, Research, Fundsindia. An analysis by Fundsindia showed that silver rose 9%during the global financial crisis, while gold increased by 40%. During the Dotcom bubble when stock markets crashed, gold gave 3% returns, while Silver gave negative returns of 5%. Surya Bhatia, financial advisor to asset managers, said: “Silver has gone through long pieces of underperformance in the past. After the 2011 peak, silver prices have weakened almost a decade, even if gold did fairly well.” Silver as a tactical play, while Silver offers both drivers of industrial activities and a secure buy, it also makes it a difficult asset to assign to. If the total market sentiment becomes negative, silver can offer a little pillow – especially if institutions and governments choose to add it to their reserves – but still gold will remain the first port to seek investors in such circumstances. At the same time, poor industrial activity can combat his question. On the other hand, silver tends to perform well in an environment like the current one – where the offer is now, demand remains resilient, even if the global uncertainty is. This makes it a useful tactical tool for investors who are willing to take measured exposure. Investors should consider silver as a tactical opportunity suitable for specific phases of the market cycle as they continue to rely on gold as a more reliable hedging for periods of increased uncertainty. If you would like to add silver to supplement your gold exposure, you should not exceed 2-4% of your total portfolio, within the total exposure to gold silver of 10-12%. Apart from Silver ETFs and Silver Fund of Fund, which invests in Silver ETFs, you may also consider multi-asset funds exposed to gold and silver, depending on the view of the fund manager. Choosing the right fund can help balance potential profits with the inherent volatility of the metal. Catch all the business news, market news, news reports and latest news updates on Live Mint. Download the Mint News app to get daily market updates. More topics #silver prices #silver #silver etfs #personal finance #portfolio read next story
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