As silver shines bright, what are the best ways to invest in the precious metal?

Silver's rally continues to gain steam.

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With silver prices soaring to record highs and outperforming gold in recent months, staging a catch-up rally, Indian investors are weighing the best way to ride the wave For investors, this has sparked a pertinent question: is physical silver, digital silver, or silver ETFs the better bet?

Analysts said that ETFs have the appeal of SIPs with low costs and transparency, making them a compelling alternative to holding physical metal while still capturing the rally in silver, while some suggest purchasing equity proxies to the commodity.

Physical silver or digital silver?

For Indian investors, silver Exchange Traded Funds (ETFs) offer the most efficient and simple way to invest in silver, said experts. A silver ETF is the simplest way for a layperson to gain exposure to silver. Just like doing an SIP in equities, investors can systematically buy silver ETFs every month to diversify their portfolio, noted Patel.

Managed by fund houses, ETFs guarantee 99.9 percent purity while eliminating the hassle of storing physical metal. “They are a cost-effective choice, featuring low expense ratios and high liquidity. The average Compound Annual Growth Rate (CAGR) for Silver ETFs over the last three years is approximately 33.5-35.5 percent,” added Makda.

Silver ETFs have delivered strong returns across the board, with most funds gaining around 18 percent in one month, 35 percent over three months, and nearly 60 percent in the past year.

Among the larger players, Aditya Birla Silver ETF, Tata Silver ETF, and Kotak Silver ETF have been top performers on a three-month basis, while SBI and Aditya Birla lead on a one-year view.

Expense ratios vary between 0.35 percent and 0.56 percent, with Mirae Asset and Aditya Birla offering some of the lowest costs. The only laggard is 360 ONE Silver ETF, which has significantly underperformed over the one-year horizon with returns of about 47 percent,

Equity proxies

According to experts, Hindustan Zinc (HZ) is a key beneficiary of the uptrend in silver prices. “We believe the exposure to silver is underpriced as the consensus expectations trail the strong move in silver in recent months with the metal now trading at $47/oz,” said Emkay Global.

The brokerage added that as per its calculations, $1/oz move in silver prices has one percent sensitivity to HZ’s EBITDA. “Interestingly, silver is a by-product of zinc which implies that 88 percent of silver revenue is a direct pass-through to EBITDA as the cost of production remains tied to zinc production,” said Emkay. As a result, the domestic broking house sees a strong potential for HZ to be repriced higher, to reflect current silver prices.

The stock has risen over 10 percent in the past month, however, it has tumbled 7 percent over the past year.

Outlook for silver

To understand which between silver or gold can offer more upside momentum, analysts refer to the gold/silver ratio. The ratio peaked at 107.21 in Q1 2025 and has since experienced a continuous six-month decline, bottoming out near 80.

“This decline signifies that silver prices are currently outperforming gold prices in the market. The next major support level for the ratio is identified at 75.50. Should the ratio continue its downward trend, it suggests the potential for silver to deliver better future returns than gold,” said Aamir Makda, Commodity & Currency Analyst, Choice Broking.

On the flip side, Bhavik Patel, Commodity & Currency Analyst, Tradebulls Securities said, “Since the ratio is near to the lower-end of the range, we believe the outperformance in silver is nearly over and going forward, gold will offer more upside than silver.”

Going ahead, Comex silver has an immediate target of $49.50–50, and with that outlook, silver prices in India are expected to touch around Rs 1,50,000 in the upcoming sessions, according to Makda. As per Patel, the immediate target for silver is $50 on COMEX and Rs 1,52,000-1,55,000 on the MCX.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.