Silver’s quiet rise: How India, EVs, and ETFs are reshaping its safe-haven role

The deep cultural connect to silver endures to this day—India is one of the largest consumers of silver in the world. Yet, silver has usually been seen as inferior to gold: respected but less valued; the metal of choice for those unable to afford gold.

But this is set to change, as silver acquires a distinct identity of its own. From being a poor cousin of gold, it is evolving into a unique asset that combines multiple qualities: safe haven characteristics of gold, industrial applications of base metals and the robust return performance of financial assets. To understand how this is playing out, a good starting point is to observe how the end-uses of silver are changing.

Financial demand

India consumes 5,000-7,000 tonnes of silver annually, of which, 700-800 tonnes is mined domestically. The remaining 80-90% of silver demand is met through imports. Jewellery is the single largest end use of silver, accounting for 35% of silver consumption. Silverware articles contribute another 15-20% of the total. These shares have remained fairly stable over the years.

But two other categories show a significant shift: physical investment and industrial use. Physical investment refers to bars and coins. These are purchased by bullion dealers as well as by silver exchange-traded funds (ETFs), which are required to back financial inflows with silver.

Historically, India has always been a large consumer of silver bars and coins, usually placing first or second in global consumption. Until recently, bullion dealers accounted for the bulk of physical purchases. Some of these dealers are involved in the jewellery or silverware trade, who buy silver when prices are low for future processing. Then, there are high net worth individuals who buy physical silver and sell on the exchange, taking advantage of arbitrage opportunities.

But 2024 saw a distinct shift: silver ETFs accounted for 783 tonnes, or 42%, of the 1,859 tonnes of physical investment. Silver ETFs are relatively new entrants to the Indian market. The first silver ETF was launched only in 2022. But by end-2024, combined silver holdings of these funds had grown to 1,183 tonnes.

This trend continued into 2025. In fact, soaring demand for silver ETFs forced several silver fund of funds—mutual fund schemes whose portfolio is made up of other mutual fund schemes—to suspend lumpsum investments and switch-ins for a brief period in October 2025. The demand for physical silver—always strong in India—is now being driven by ETFs rather than bullion traders. The more retail investors pour money into ETFs, the more ETFs need to stock up on silver—and the greater the demand for physical silver.

Industrial uses

The second big shift in silver demand is in the industrial applications space. Silver has been used in various industrial sectors for years, but recent technological advances have made it almost indispensable in new, high-growth sectors. Globally, industrial demand now accounts for 59% of total silver demand, up from 49% a decade ago.

Some of the fastest-growing industrial segments that use silver are solar power and photovoltaic cells, electric vehicles (EVs) and artificial intelligence applications, including energy storage in data centres, consumer wearables, car safety features and automatic brakes. Silver has high electrical conductivity, low resistance and can survive harsh conditions—properties that make it suitable for applications ranging from batteries to outer space.

New technology has given a fresh boost to silver use. For example, according to industry association The Silver Institute, silver loadings amount to 15-28gm per internal combustion engine (ICE) light vehicle; 18-34gm per hybrid light vehicle, and 25-50gm per battery EV; autonomous vehicles are expected to use even more silver.

Going forward, industrial demand for silver in India is forecast to increase rapidly as the government actively scales up infrastructure and promotes silver-intensive sectors such as power, automotives and renewables. Take power, where total generation grew 5-7% annually in the last decade. Silver is an important component of transmission and distribution infrastructure.

The policy thrust on renewable energy adds to silver demand. Given the generally sunny climate in India, of the 500GW renewable energy target set for 2030, 300GW is expected to come from solar energy. India’s current solar capacity is about 129GW. It is estimated that every gigawatt of solar power added consumes 80-100 tonnes of silver in solar panels and grid infrastructure.

Strong government support for electrical mobility is expected to boost the EV market in India. Some estimates suggest that EV applications could overtake solar power as the main end user of silver. In addition, the rise of smartphone manufacturing and the growth of data centres, and emerging technologies like drones and spacecraft components, will collectively increase the demand for silver.

Greater sheen

What all this means is that silver has become a core economic input, rather than a metal primarily used for ornamental purposes. In November, the US government reclassified silver as a critical mineral, implying that disruption in the supply of silver could affect US economic and national security.

Unfortunately, the supply of silver is not growing at the same pace as demand. Silver has been in a supply deficit since 2021. This combination of scarce supply and booming demand has done wonders for the price of silver. In 2025, the price of silver shot up by 87%, against 54% for gold. The rapid run-up in silver prices has led to the idea that silver may have the potential to replace gold as the ultimate safe haven and store of value.

A safe haven is an asset that retains or increases in value during a crisis. By this definition, silver qualifies as a safe haven. An analysis of silver and gold prices over the past 25 years shows that both rise in times of crises. Gold has two additional advantages for investors: it is an inflation hedge, and it can be used as collateral to borrow informally (moneylenders) and formally (gold loans from banks and non-banks).

Silver meets the first criteria, but conditionally: prices of both gold and silver tend to go up during inflationary periods, but silver is typically more volatile than gold. Silver price often lags behind the price of gold. For instance, when inflation was over 8% annually during 2008-09 to 2012-13, gold started rising first, and silver caught up a few months later. A similar lag was observed during 2022-24, when the economy experienced high inflation as well as geopolitical uncertainties (Ukraine-Russia, Israel-Palestine).

Thus, the inflation protection offered by silver may be slightly less than gold; though it still beats traditional safe assets like bonds and fixed deposits. In terms of being used as loan collateral, silver was at a disadvantage to gold until recently. However, India’s central bank has notified that from 1 April 2026, banks, non-banks and housing finance companies will be permitted to lend against silver jewellery, ornaments and coins with specified valuation norms, and limits for pledged amounts and loan tenors. This ruling could unlock household silver holdings and bring silver loans into the formal financial system—potentially making silver as collateralizable as gold.

A class of its own

In summary, the unprecedented bullishness in silver prices is the result of surging industrial demand, safe haven flows driven by global uncertainties, and higher allocation to investment vehicles based on silver, all playing out against inadequate supply. Does this make silver the new gold?

No, but it does change the way silver is viewed as an asset class. More so at India’s current stage of economic development, where at least three India-specific factors favour a re-rating of silver.

First, greater financialization of household savings has pushed retail money into financial assets via systematic investment plans (SIPs). Passive funds have been the main beneficiaries of this trend; specifically, silver ETFs, which have seen huge inflows this year. According to Association of Mutual Funds in India (Amfi), as of October, silver ETFs had about 2.5 million investor folios and assets under management (AUM) of ₹42,537 crore. In October 2024, the corresponding figures read 0.45 million folios and AUM of ₹12,331 crore.

The massive investor interest in silver ETFs was probably fuelled by silver’s recent outperformance—silver prices have risen 60% between June and December. The fact that silver prices tend to be more volatile than gold has not seemed to deter investors. A possible explanation is that investors have learnt to manage, even monetize, the inherent unpredictability of silver prices through futures and options. Data supports this theory: silver futures are among the most actively traded on commodity exchanges.

Second, there is greater interest in alternate investments like gold and silver. This is partly because investors are more financially aware, and therefore recognize the diversification benefit of alternate asset classes. Online investment platforms and frictionless digital payments have also made such investments easier. Silver offers a more affordable entry point into the alternate assets space, as it is much cheaper than gold, despite the recent run up in prices.

Third, as India becomes wealthier, asset classes that enable wealth preservation are in higher demand. According to IMF estimates, India’s per capita income is projected to rise from $2,820 in 2025 to $4,350 by 2030. Silver, with its proven track record and dual demand drivers, is appealing to those who want to preserve wealth for their retirement or the next generation. Not surprisingly, a recent Kitco news report stated that India is at the centre of the silver story, pointing to its “insatiable" demand for silver despite the rupee price of silver reaching all-time highs.

It is not just domestic retail frenzy that is propelling silver to new highs. Global sentiment has shifted in favour of gold and silver as dollar depreciation, geopolitical uncertainty and rising developed country debt create a fear of currency debasement. The central bank of Russia is reported to be buying silver to diversify its reserves, while Saudi Arabia is said to be investing in silver through the ETF route.

Central bank approval may be the final validation needed. Silver could be a good asset for a world grappling with multiple uncertainties. As a monetary metal, it holds value in a crisis. And, as an industrial metal, it provides an upside when growth is strong. In other words, an asset for good and bad times, not competing with gold, but in a class of its own.

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