Gold or silver: Where should you invest your money?

Summary: Gold and silver funds have surged this year, but a 25-year SIP comparison quietly tells a very different story. One metal compounds, another misbehaves and the mix is not what most investors expect.

Gold and silver funds have delivered the kind of returns this year that turn even the most disciplined investor into a part-time metals expert. Gold funds are up 65 per cent so far this year; silver funds have surged nearly 95 per cent. 

These numbers silence caution and spark an obvious question: Should you increase your allocation now?

The trouble is that precious metals move in long, unpredictable cycles. A single blockbuster year says very little about future behaviour. To understand what these metals really offer, you need to zoom out.

25-year performance

Imagine a simple SIP of Rs 1,000 every month since January 2000.

Across 25 years:

• Gold builds the largest corpus: Rs 30.4 lakh
• A gold + silver mix follows: Rs 28.7 lakh
• Silver ends at Rs 27 lakh

Gold wins, while silver’s explosive rallies are almost always followed by long stretches of sideways movement or sharp corrections. The white metal behaves like an industrial commodity, powerful in an upcycle, volatile in a downcycle.

In fact, silver is twice as volatile. Over the past three years, the volatility of gold funds, excluding ETFs, has been about 13 per cent, while silver funds have shown volatility closer to 22.8 per cent. 

How gold and silver behave in turbulent markets

Where both metals shine — and where they earn their place in a portfolio — is during deep market corrections.

Across the 2008 Global Financial Crisis, the Yuan devaluation scare, Covid’s first wave and the 2021–22 and 2024–25 corrections, gold has consistently risen or stayed flat when equities fell sharply.

Examples:

• GFC (2008–09):
  • Sensex: –55.3 per cent
  • Gold: +33.4 per cent
  • Silver: +10.9 per cent
• Covid crash (Jan–Mar 2020):
  • Sensex: –38.1 per cent
  • Gold: +2.0 per cent
  • Silver: –20.2 per cent
• Recent correction (2024–25):
  • Sensex: –14.0 per cent
  • Gold: +15.5 per cent
  • Silver: +7.7 per cent

The lesson is consistent: gold cushions better. Silver cushions sometimes. Equities cushion never.

Even a small allocation to metals reduces drawdowns, especially in equity-heavy portfolios.

What you should do

If you have to pick, choose gold due to:

• Higher long-term returns
• Lower volatility
• Better behaviour during market stress
• Stronger compounding over decades

If you must, add silver only as a tactical diversifier, as it offers strong bursts during industrial cycles.

Last but not least, keep gold and silver within 10 per cent of your portfolio. Give gold the larger share.

For more such insights, keep reading Value Research.

Also read: All that glitters is gold

This article was originally published on December 04, 2025.