Differences Between Gold and Silver - Investments

Choosing between gold and silver often comes down to understanding their market behaviour, industrial demand, historical performance and current economic trends and other factors.

Is Gold Better than Silver?

Several factors influence whether gold or silver is the better investment at the moment, as both offer distinct advantages: 

• Market Stability: Gold is widely recognised as a global hedge against inflation. ^[1] In 2024, central banks added around 1,000 tonnes of gold for the third year, reflecting strong industrial demand. Meanwhile, silver’s increasing use in green technologies like solar panels, electric vehicles enhance its long-term investment appeal.
• Price Volatility: Silver tends to be more volatile than gold due to its dual role as both an industrial and investment metal. While this adds risk, it also leads to stronger gains in favourable market conditions. 
• Industrial Demand: ^[2] Silver has broader industrial applications, especially in photovoltaics. In contrast, gold’s industrial use, primarily in electronics and dentistry, accounts for a smaller share of its total demand, making it less sensitive to industrial trends.  
• Accessibility: Silver is affordable per ounce, making it more accessible for small investors to start investing. However, because you need more silver (by weight) to match the same value as gold, storing and transporting costs can increase over time as compared to gold. 
• Investor Appetite: ^[3] In 2024, gold’s annual investment rose by 25%, while silver saw a decline in physical investment despite industrial demand^[4].

Similarities Between Gold and Silver ETFs

The similarities between gold and silver exchange-traded funds (ETFs) include:

• Backed by Physical Assets: Many gold and silver ETFs are backed by physical holdings of the metals, allowing investors to gain exposure without directly handling or storing them physically. 
• Easy Accessibility: These ETFs trade on major stock exchanges, allowing easy entry and exit for investors. This makes investments in gold and silver accessible even for first-time buyers. 
• Good for Diversification: Whether you are building a defensive or aggressive portfolio, both ETFs are a way to gain exposure to commodities. They are well-suited for investors looking to diversify across asset classes by including gold or silver. 

Factors to Consider When Investing in Gold or Silver

Before investing in gold or silver, an investor needs to consider the following factors. It is also advisable to consult a tax advisor to understand any potential tax implications:

• Your Financial Objective: Gold is widely used as a hedge against inflation and geopolitical uncertainty. Silver’s price movements are heavily influenced by industrial demand. Your decision to invest in gold or silver should depend on your long-term goals and market outlook. 
• Volatility and Risk Profile: Silver tends to be more volatile due to its dual demand. This may result in sharper price swings. Both metals carry their own risk-reward profiles. So, it is important to align your investment choice as per your risk appetite when considering investing in these metals. 
• Storage: Gold is easier to store. Silver, due to its bulk, incurs higher storage and transportation costs. 
• Diversification Potential: Including both metals in your portfolio can enhance diversification. Gold protects against economic shocks, while silver adds growth potential. While analysing gold vs silver for wealth creation, a balanced approach can maximise gains and reduce downside. 
• Tax Considerations: Both Gold and Silver ETFs are taxed in the same way. For more information on their tax structures, please refer to this link*.

Ways to Invest in Gold or Silver

You can invest in gold and silver in the following ways:

• Physical Bullion (Bars and Coins): A traditional form of ownership, allowing direct control over your asset. Popular among investors who prefer tangible assets. 
• ETFs (Exchange Traded Funds): These funds track the price of gold or silver and are backed by physical holdings. Ideal for investors who want price exposure without the hassle of jewellery-making charges or physical storage. 
• Digital Gold and Silver Platforms: Many platforms now allow fractional investing, where you can buy even a gram. It may be cost-effective and convenient, although the investments are unregulated.
• Futures and Options Trading: Available for both gold and silver on commodity exchanges. These are leveraged instruments and suited for experienced investors because of their higher risk and potential for amplified gains or losses. 
• Jewellery and Collectables: While not the most efficient investment avenue due to its making charges, jewellery remains a cultural preference in countries such as India.

Conclusion 

As the commodities market evolves, understanding both Gold and Silver for investments will remain essential to building a long-term portfolio that suits your risk profile and financial goals. 

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.

*Please note that the details provided here represent current offerings and are subject to change. This information should not be viewed as financial advice or a recommendation to invest in Zerodha Mutual Fund schemes. Investors are encouraged to consult with their financial advisor for personalized investment advice.

Please note that this article or document has been prepared on the basis of internal data/ publicly available information and other sources believed to be reliable. The information contained in this article or document is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party in any manner. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article or document.

Published on Jun 3, 2025