As silver’s industrial use grows, investors are piling in. Should you?

Over the past 20 years, gold prices have shot up 1,200% from ₹7,638 per 10 gm in 2005 to more than ₹1 lakh as of June 2025. It delivered positive returns in 16 of these years, and gold prices have risen 31% so far this year. Silver has also proved resilient. Prices have held above ₹1 lakh per kg for the past three weeks. Over the past 20 years (2005-2025), the metal has gained 668.84%.

With nearly 60% of its global demand driven by industrial use so far this year (up from 50% in 2016), particularly in solar panels and electric vehicles, silver is becoming increasingly relevant in a world shifting to green technologies. As demand surges, the main question facing investors is: should you buy silver now?

Let’s try and answer that.

Why might you bet on silver?

Silver is finding increasing use in manufacturing. According to the Silver Institute, 58% of the total demand for silver now comes from industrial applications. In particular, it is being used in solar panels and electric vehicles as it is the best conductor of electricity among all metals.

Bloomberg estimates the demand for photovoltaic cells, used in solar panels, is expected grow four-fold over the next decade. Photovoltaic cells account for 19% of the total demand for silver and demand for them is expected to grow as the world turns to green energy. Bloomberg forecasts that 21 million EVs will be sold this year, and 57 million in 2035. Currently, 25 to 30 grams of silver on average is used in the production of an EV.

Anil Ghelani, head of passive investments at DSP Mutual Fund, said the demand for silver is inelastic, since the amount of silver used in solar panels and EVs is minimal. “An EV uses 25-30 gm of silver. Even if silver prices go up 30%, it’s unlikely that carmakers will stop using it,” he said.

What if the supply of silver increases?

Vikram Dhawan, head of commodities and fund manager at Nippon India Mutual Fund, said roughly two-thirds of global silver production is a by-product of mining other metals such as gold, copper, and lead-zinc. Only a third comes from primary silver mining. As a result, even if silver prices rise, supply cannot adjust quickly since it is largely dependent on the production cycles of other metals.

Data from the Silver Institute shows there has been a deficit of silver production each year since 2020. In a presentation, DSP Mutual fund wrote, “Silver supply from mine production and recycling has been consistent, whereas the demand has grown consistently, especially for photovoltaics, where the demand has grown at a CAGR of around 23% over the last five years.”

What does the gold-silver ratio indicate?

The gold-silver ratio is a popular gauge of the relative valuation of the two precious metals. It shows how many ounces of silver are needed to buy an ounce of gold. The ratio is now around 91, up from 77 a year ago, which indicates that the price of gold is relatively higher.

“What this indicates is that in recent times, gold has been moving fast lately, and silver didn’t go up as much relatively,” said Ghelani of DSP Mutual Fund. However, he added that there isn’t always a direct cause-and-effect relationship between gold and silver prices as silver has its own industrial demand as well.

Dhawan from Nippon noted that the relevance of the gold-silver ratio may diminish over time. Silver is becoming increasingly sensitive to industrial trends and economic cycles, while gold will likely retain its status as a safe-haven asset, especially during periods of uncertainty and financial stress, he said.

What could go wrong with silver?

Dhawan cautioned that silver’s long-term demand growth is closely linked to the pace of green-energy adoption worldwide. A significant rollback or slowdown in government commitments—particularly from the US—towards renewable energy and decarbonisation initiatives could dampen silver’s green demand outlook. Any broad economic slowdown that curbs industrial production would also weigh on silver prices, given its dual dependence on the industrial and green-tech sectors.

“While we are constructive on silver due to demand outpacing supply, potential risks include a slowdown in photovoltaic demand for silver or its substitution by another metal,” said Chintan Haria, principal – investment strategy at ICICI Prudential AMC. “Although unlikely, the emergence of a substitute for silver in industrial production could impact its prices. Future innovations or shifts in solar-related demand could also weigh on silver prices.”

Niranjan Avasthi, senior vice-president and head of products, marketing and digital at Edelweiss Mutual Fund, said silver prices are more volatile than gold as silver has wider industrial use, so demand and supply fluctuations affect prices. While the gold ETF was launched in 2007, the silver ETF kicked off in 2022, and new investors in silver should be mindful of the volatile nature of silver, he cautioned.

According to Dhawan, the two metals serve unique purposes in a diversified portfolio. Gold continues to act as a store of value and hedge against macroeconomic risks. In contrast, silver is gaining prominence not just due to its industrial applications but also its critical role in green technologies such as solar panels, EVs and battery storage systems. These segments are expected to be key drivers of silver demand in the coming decades.