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When prices rise and rupee loses value, investors turn to assets that can hold their value. Traditionally, gold has been an inflation hedge but now, silver is stepping into the spotlight. With its growing industrial demand and affordability, many experts believe silver could be the next smart way to protect wealth from inflation. The question is can silver rival gold as the ultimate inflation shield? Let’s explore why silver is gaining attention in 2025 and how silver performs during inflation.
How Silver Performs During Inflation?
Historically, silver has performed during periods of high inflation. For instance, in 1970s, when U.S. inflation surged, silver prices skyrocketed by nearly 3,000% between 1970 and 1980. Even in recent years, following the post pandemic inflation wave, silver prices have shown a steady recovery trend.
| Period | Silver Price Start | Silver Price End | Price Increase |
|---|---|---|---|
|
1970s (Stagflation Era) |
~$1.6 ( 1970)
|
~$50 ( 1980)
|
~3,025% |
|
2008–2011 (Post-Financial Crisis)
|
~$9 ( 2008)
|
~$49 ( 2011)
|
~444%
|
|
2020–2025 (Post-COVID)
|
~$12 ( 2020)
|
~$54 (2025)
|
~350%
|
Is Silver Still a Good Investment in 2025?
To understand this, we have to look at two core points:
- What History Tells Us About Silver’s Cycles?
- Silver-Gold Ratio
If you look at silver’s journey over the past five decades, it’s been full of dramatic ups and downs. Each big rally from the Hunt Brothers’ price squeeze in 1980, to the post-2008 recovery in 2011 and now the 2025 breakout above US$50 per ounce has been followed by long periods of correction and consolidation.
Silver Price Trend (1975-2025)
Image Source: Gold Price
But 2025 feels different. This rally isn’t just about speculation or short-term hype. It’s backed by real, lasting demand from industries like electric vehicles (EVs), solar power and electronics, along with a structural supply deficit that continues to tighten the market.
In the past, silver prices were often driven by temporary triggers:
- 1980: Price spike came from heavy market speculation and manipulation.
- 2011: Rally followed massive liquidity from global stimulus (Quantitative Easing) and paper demand.
Now, in 2025, silver’s rise is built on solid fundamentals, growing industrial use, global green energy transition and consistent investor demand. Even after sharp rallies, prices are finding quick support, showing this trend has strong underlying strength instead of speculative bubbles.
Gold-silver ratio shows how many ounces of silver are needed to buy one ounce of gold, a key indicator investors use to gauge which metal might be undervalued.
Long term Gold-silver average is around 60–65. However, in early 2025, gold prices climbed much faster than silver, pushing the ratio sharply higher. It peaked near 103 in April 2025, historically seen as high suggesting that silver was undervalued compared to gold.
After that, the ratio eased, settling around 87–88 by August 2025. By October 2025, it stood near 84, following a correction in both gold and silver prices.
Image Source: Infomerics
Which means silver hasn’t fully caught up to gold’s value yet. This suggests that silver’s rally is likely in the middle of its growth phase, not at the top.
In the past, silver’s price spikes were like fireworks, bright and fast, but short-lived. As you see in the silver price chart.
But this time, it’s different. The current rally looks more like a steady engine, driven by real industrial demand, limited supply and global economic shifts, not just market hype.
So, even if prices see short-term ups and downs, the long-term outlook for silver looks much stronger than in any of its previous cycles.
Why Silver Could Be the Next Inflation Hedge?
Inflation doesn’t just affect numbers on a chart, it impacts your everyday life. When fuel, groceries and basic necessities become costlier, the real value of your money starts to decline. That’s when investors turn to safe assets like gold and silver to protect their wealth.
Gold has always been the traditional favorite, but in 2025, silver is emerging as a strong contender. While Nifty has delivered around 9% YTD returns, silver and gold have outperformed, returning 46% and 50% respectively (as of 23 October 2025). This shows how silver is proving its worth as both an inflation hedge and a growth asset.
Here’s why silver stands out as the next inflation hedge:
- Dual Demand Advantage: Silver is unique because it serves both as an investment metal and an industrial material. Its demand comes from investors seeking safety and from industries like solar energy, electric vehicles and electronics. This dual role helps keep its value strong even when markets turn uncertain.
- Affordable Entry Point: Silver’s lower price makes it much more accessible for retail investors compared to gold. You can invest small through silver ETFs, mutual funds or physical bars, making it ideal for anyone looking to hedge inflation without large capital.
- Volatility with Opportunity: Silver prices can fluctuate more than gold, but those swings often create profitable entry points for patient investors. Over time, these cycles have historically rewarded long-term holders.
- Backed by Global Trends: Clean energy transition is fueling massive demand for silver especially from solar panels, batteries and semiconductors. As the world accelerates toward sustainability, silver’s industrial relevance adds an extra growth layer beyond its inflation protection.
Comparing Silver With Other Inflation Hedges
- Silver vs Gold:Gold has always been seen as the ultimate safe haven, but it’s also expensive and less accessible for small investors. Silver, being more affordable, gives investors a chance to benefit from both its industrial demand and store of value appeal. As industries like EVs and solar energy expand, silver’s price potential could outpace gold in the long run.
- Silver vs Real Estate: Real estate is a proven hedge against inflation but comes with high entry costs, taxes and limited liquidity. Silver, in contrast, is affordable, easy to buy or sell and doesn’t require maintenance or large capital. It gives investors quick flexibility, especially in uncertain markets.
- Silver vs Stocks: Stocks can perform well during growth phases, but they’re vulnerable to market swings and global slowdowns. Silver adds diversification and stability to a portfolio, performing well when markets struggle. Unlike stocks driven by company earnings, silver’s value is tied to both industrial growth and economic sentiment, making it a strong defensive asset.
Final Words
If you’re building a balanced portfolio to protect against inflation, overlooking silver could be a mistake. It’s affordable, has dual value as both an investment and an industrial metal and has consistently proven resilient in uncertain times.
Whether you choose physical silver or silver ETFs, adding some silver to your portfolio enhances diversification. Inflation may weaken currency value, but tangible assets like silver help preserve and even grow your wealth faster than many traditional investments.
FAQs on Silver Hedge
Why is silver considered a good inflation hedge?
Silver tends to hold its value when inflation rises and currencies weaken. Because silver is both a precious and industrial metal, its demand increases during economic uncertainty, helping protect purchasing power.
Is investing in silver better than gold?
Gold is known for stability and long term wealth preservation, while silver offers higher growth potential thanks to its industrial use. Owning both metals can balance safety and potential returns in your portfolio.
Are silver ETFs safe to invest in?
Yes, silver ETFs in India are regulated by SEBI and backed by real physical silver stored in secure vaults. ETFs provide a convenient and low-cost way to invest without worrying about purity or storage issues.
What factors influence silver prices the most?
Silver prices are shaped by global inflation, interest rate trends, industrial demand and investor sentiment. Rising use in solar panels, electric vehicles and electronics adds strong long-term growth potential.
How much silver should I have in my portfolio?
Most financial planners suggest allocating 5–10% of your investment portfolio to silver, depending on your risk tolerance. It helps diversify assets and cushions against inflation or stock market volatility.
Happy investing and thank you for reading!
Disclaimer:
This website content is only for educational purposes, not investment advice. Before making any investment, it’s important to do your own research and be fully informed. Investing in the stock market includes risks, and you should carefully read the Risk Disclosure documents before proceeding. Please remember that past performance doesn’t guarantee future results, and due to market fluctuations, your investment goals may not always be achieved.
