Can Silver Become More Costlier Than Gold? Understanding the Dynamics
3 June, 2025
Synopsis:
Silver is becoming more popular among investors because it is used in industries like electronics and solar energy. People are also choosing silver during uncertain times because of its investment potential.
The demand for silver is rising, but its supply is falling short due to fewer new discoveries and lower quality of silver ores. This shortage can be expected to continue in the near future.
Silver Exchange Traded Funds (ETFs) have emerged as an accessible way to invest in silver without physically holding the metal. These instruments track the price of silver, making silver investing simpler for retail investors.
There will be some major changes happening in the world of precious metals like gold and silver, whether related to their safe-haven demand or their supply constraints. For a long time, gold has been known as the safest option for investors, especially during uncertain times. But now, silver is catching everyone's attention. The reason is simple. Silver is not just a precious metal; it is also used in many industries like electronics, solar energy, and electric vehicles. On top of that, more people are seeing silver as a smart investment.
Why Silver Prices Could Rise?
These are the key factors that can influence a rise in the price of silver:
Growing Industrial Demand:
Silver's extensive use in industries like electronics, solar energy, and electric vehicles is driving demand. The expansion of AI and cloud computing has led to a projected 33% annual increase in data centre capacity through 2030, with silver playing a crucial role in electronic components. Additionally, large-scale renewable energy projects, such as the NEOM Green Hydrogen Project in Saudi Arabia, are set to utilise significant amounts of silver in their solar panels.
Supply Constraints:
Despite rising demand, silver production is struggling to keep pace. In 2024, the global silver market experienced a supply deficit of 182 million ounces, and may continue to do so. Limited exploration for new reserves and declining ore grades contribute to this imbalance.
Investment Appeal
Silver's dual role as an industrial and precious metal makes it an attractive investment, especially during economic uncertainties. Geopolitical tensions and inflationary pressures have led investors to seek assets that can act as a hedge, with silver emerging as a viable option.
Gold-to-Silver Ratio Trends
The gold-to-silver ratio, indicating how many ounces of silver are needed to purchase one ounce of gold, is a key metric for investors. Historically, a high ratio suggests that silver is undervalued relative to gold. .
Price Projections
Silver prices may rise in 2025, driven by increased industrial demand and supply deficits. In contrast, gold prices are projected to rise toward influenced by central bank purchases and geopolitical tensions.
How to invest in Silver via ETFs
Silver ETFs (Exchange Traded Funds) are investment schemes that aim to track the domestic price of physical silver. These ETFs are backed by physical silver and are traded on stock exchanges, just like shares. They offer a convenient, low-cost, and liquid way to gain exposure to silver prices without worrying about storage or purity of the metal.
Investing in Silver ETFs Through HDFC Bank SmartWealth App:
Log in to the HDFC Bank SmartWealth App using your registered credentials
Go to the ‘Discover’ section
Tap on ‘Explore & Invest’
Search ‘Silver ETFs’
Select your preferred fund and choose between SIP or Lump Sum
Select your preferred amount
Confirm and complete your investment. Silver is no longer just the poor cousin of gold. With its critical role in modern industries and a tightening supply, it is shaping up to be a smart investment choice for the future. While overtaking gold in price remains a tough milestone, silver's growth story looks stronger than ever.
Start your journey of smart investing with the HDFC Bank SmartWealth App. Explore investment options like silver investments and diversify your portfolio to stay ahead of future market trends.
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