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Gold ETF vs. Silver ETF: Which is Better for Your Portfolio?

Gold ETFs and Silver ETFs are mutual fund schemes available for investors seeking exposure to precious metals without the complexity of physical ownership. Here’s a detailed exploration of both, comparing their features, risks, and suitability for different investment profiles.

Gold ETF vs Silver ETF: An In-Depth Comparison

Gold ETFs and silver ETFs offer a simple way to invest in precious metals, tracking the price of the underlying metal. Units of these ETFs are listed and traded on recognized stock exchanges like stocks.

 Investors may consider this as a portfolio diversifier while, their characteristics and market dynamics diverge in significant ways.

What are Gold ETFs?

Gold ETFs (Exchange Traded Funds) are mutual fund schemes that invest primarily in physical gold or gold-backed instruments. Investors don’t own the physical gold itself, but the value of the units in the fund reflect the price movement of gold subject to market fluctuations and tracking error.

  • Traded on stock exchanges and can be bought/sold easily during market hours.
  • Backed by physical gold, held in secure vaults by custodians.
  • Offers transparency, compared to buying gold coins or bars.

What are Silver ETFs?

Silver ETFs operate similarly to gold ETFs, but invest in physical silver. They allow investors to access silver’s price movements without handling the actual metal subject to market fluctuations and tracking error.

  • Focuses on silver bullion.
  • In India, silver ETFs are newer compared to gold ETFs
  • Provide both diversification and exposure to industrial demand, since silver’s value is also influenced by manufacturing and technology sectors.

Key Differences: Gold ETF vs Silver ETF

Here’s a side-by-side comparison for clarity:

Feature

Gold ETF

Silver ETF

Underlying Asset

Physical Gold

Physical Silver

Volatility

Lower compared to silver, seen as ‘store of value’

Higher, seen as undervalued compared to Gold

Taxation (India)

Investment period <= 1 year:

Gains/profits are treated as short-term capital gains & taxed as per your tax slab (plus 4% cess and surcharge, if any).

Investment period > 1 year:

Gains/profits are treated as long-term capital & taxed at 12.5% (plus applicable surcharge and 4% cess).

Investment period <= 1 year:

Gains/profits are treated as short-term capital gains & taxed as per your tax slab (plus 4% cess and surcharge, if any).

Investment period > 1 year:

Gains/profits are treated as long-term capital & taxed at 12.5% (plus applicable surcharge and 4% cess).

Industrial Use

Not as high as Silver

Significant - much higher compared to Gold

Portfolio Role

Hedge against inflation

Aggressive diversifier with growth potential

Liquidity

Characterized by higher liquidity

Also highly liquid and actively traded, but they generally have lower trading volumes. Their market is more influenced by industrial demand, which may lead to greater price volatility.

Which one should investors choose - Gold ETFs or Silver ETFs?

  • Gold ETFs may suit investors looking for a store of value.
  • Silver ETFs may appeal to those willing to accept higher risk for growth potential, or who believe in technological and industrial expansion driving silver prices.
  • Combining both may provide effective diversification.

Final Thoughts

Both gold ETFs and silver ETFs present unique opportunities and risks. The choice depends on investment goals, risk tolerance, and market outlook. While gold remains the classic option for hedge against equity volatility, silver’s upside is tied to economic and industrial trends. Investors may benefit from consulting financial advisors or conducting thorough research tailored to their needs.

Disclaimer - 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.

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


Published on Nov 08th, 2025

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