Silver has traditionally attracted investors’ attention as one of the most stable precious metals, especially during periods of economic instability and rising inflation. However, many people wonder whether silver is a bad or good investment. This precious metal has a number of features that make it a promising asset, but it is essential to consider the potential risks involved.
This article examines silver investment from multiple angles, covering everything from long-term prospects to price volatility, helping you assess whether silver is worth investing in. Besides, it provides an overview of various investment options, including physical silver, mining stocks, and ETFs, to guide you in choosing the right instrument. This detailed analysis will help you decide whether to consider silver as a good investment in 2025 and beyond.
The article covers the following subjects:
Major Takeaways
Investing in silver can safeguard your capital amid inflation and economic turbulence. However, it is vital to stay alert to potential price fluctuations.When evaluating whether to invest in silver, it is crucial to assess the long-term outlook and be prepared for potential short-term risks.Many people consider silver a good investment for diversification of their portfolios, especially when this asset is combined with physical metals, mining stocks, or ETFs.Silver is often viewed as a more affordable asset than gold, making it attractive to novice investors.Silver is poised for growth driven by industrial demand, particularly in the electronic and renewable energy sectors, making it a promising asset for long-term investors.
Why invest in Silver?
Silver is a physical good with intrinsic value. Therefore, its value cannot fall to zero, unlike numerous securities. Stocks depreciate due to the bankruptcy of companies, and futures contracts can go negative, like oil futures in April 2020.
The silver price is influenced by both investment and industrial demand. This makes it possible to predict future XAG price dynamics based on the analysis of fundamental factors. Investor demand is influenced by the condition of the global economy, while the situation in the mining and manufacturing sectors affects the industrial sector.
It is possible to invest in metal itself (bars, coins), in depersonalized silver (unallocated metal account, purchase on the exchange) or to buy papers of silver mining companies (stocks, ETFs, mutual funds, etc). Investors can choose an investment object according to the desired parameters.
Historically, in the medium term (from three years or more), the growth rate of silver outstrips inflation, so investing in this metal can be used as a low-risk way to preserve and increase capital.
Silver Price Drivers
Silver has increased dramatically in recent years due to the following fundamental factors.
Artificial Intelligence and Technological Progress
The production of AI chips has boosted demand for silver by 15%.New-generation data centers use many devices that contain silver components.The development of 5G infrastructure requires highly conductive materials, where silver is indispensable.
Green Energy
Solar panels account for up to 20% of total industrial demand for silver.The volume of solar power plants commissioned increased by 25% in 2024.Each electric vehicle uses, on average, between 15 and 30 grams of silver.
Structural Supply Deficit
A silver deficit exceeding 200 million ounces has been observed for the fourth consecutive year.Easily accessible deposits are being depleted, requiring more costly extraction technologies.The declining silver content in ore increases production costs.
These factors are shaping a steady trend. Supply remains limited, while demand continues to grow, especially in high-tech and environmentally friendly industries. This makes silver not only a reliable hedge against inflation, but also an asset with significant upside potential.
What are the risks of investing in silver?
With short-term investments in silver, investors risk losing some of their money. This is particularly applicable to investments in physical silver, characterized by the largest difference between the purchase and sale (or repurchase) prices. If silver investment coins are not properly stored, their condition may deteriorate, reducing the sale price.
Silver investments in unallocated metal accounts are not insured as standard deposits, so if the bank’s license is revoked or if it goes bankrupt, the investor may lose funds.
Investments in silver UIFs are not insured as well. In addition, there is a possibility that the UIF manager will buy silver at the wrong time, and the investor will lose part of the capital.
A common risk for all silver investing methods is associated with uncertainty about future prices. Even after conducting a competent fundamental and price analysis, the possibility of the opposite situation will remain.
Brief history of Silver investing price
Silver’s all-time low of $0.28 per troy ounce was recorded during the US Great Depression in 1932. However, the stock market crash was not the main cause but the catalyst. The decline in industrial demand for silver began ten years earlier. During this period, the gradual deterioration of the economic situation reduced the demand for finished products, which led to lower prices and made producing silver products unprofitable. The investors’ demand did not have a significant impact at that time.
The subsequent price rise, which lasted approximately 35 years, was due to the low volumes of silver mining during the economic recovery after WWII.
In the 1970s, the Hunt brothers invested millions of their inheritance in silver. In 1973, they began buying metal at $2.9 an ounce. As a result, the XAG price rose to $6.75 after two months of continued purchases.
Between 1974 and 1976, silver prices collapsed from $6.75 to $3.75 per ounce as Mexico saw an opportunity to capitalize on earlier price increases and sharply increased silver sales in the market. This happened at a time of rising unemployment and inflation, so there was no stable support for the silver demand from the industry.
Owing 15% of the world’s reserves, the Hunt brothers bought silver, pushing the price to about $50 per ounce. In 1980, the exchange raised the amount of collateral for silver contracts. The Hunt brothers’ financial resources were insufficient to meet the margin requirements. Brothers had to sell some of the silver they had purchased to contribute the necessary funds. This caused a 500% price drop. As a result, by the spring of 1980, an ounce of silver had dropped to $11.
Before the stock market crash in 1987, silver had surged by 50% to $9. The hike occurred due to increased investment demand for precious metals, which is typical for unstable economic conditions. However, by the end of the year, the rate collapsed almost to the previous level along with the rest of the stock market, as the demand for industrial metal fell sharply.
Over the next few years, the silver decline continued. Significant reserves have been explored in the silver mines, so the supply greatly exceeded demand. In 1993, silver reached a low of $3.67 per ounce.
One of the most significant silver price rises occurred during the global bull market. From 2002 to 2008, XAG soared from $4 to $20 an ounce, increasing by almost 400%.
In the same year, a global banking crisis occurred. As a result, silver declined to almost $9 per ounce by December.
Due to increased investment demand during the crisis, the silver rate reached its previous high of $20 by the end of 2010. After that, XAG price more than doubled, reaching $48 per ounce by April 2011.
Against the background of the strengthening dollar and the outflow of investments from the mining sector into securities with a stable income, silver has decreased by 70% over the next 5 years. It reached $14 an ounce by early 2016.
A new silver rally began in 2020 at $12.65 per ounce in February and ended at $28 per ounce in July.
After a prolonged consolidation, silver began to rise rapidly in 2024.
Key events:
In October 2024, silver climbed above $30 for the first time since 2012.At the end of 2024, the precious metal rallied by 21.46%, outperforming gold in terms of returns.In June 2025, the price reached a new high of $36.32.
Main growth drivers:
Record industrial demand of 680.5 million ounces.The booming solar energy sector.Growing utilization in AI chip production.A global supply deficit persisting for the fourth consecutive year.
These factors have made silver one of the fastest-growing commodities. Now, investors are increasingly using it as a reliable asset to diversify their portfolios amid structural changes in the global economy.
Analysts predict that silver is set for an upward trajectory. In the near term, prices may rise to $40–$50 if investor demand remains strong.
Silver, stocks and inflation
Assume that a market participant plans to invest their profits in silver. Thus, it is crucial to analyze the ROI over one-, five-, and ten-year periods.
Let’s analyze the ROI for 2024.
The ROI formula:
(P – S) / S × 100%,
where P is the value of the investment at the end of the period, and S is the value of the initial investment.
Let’s compare the silver price, shares of three mining companies, and a silver ETF. The data is relevant as of July 2025.
Silver:
Pan American Silver Corp. stocks:
First Majestic Silver Corp. stocks:
Wheaton Precious Metals Corp. stocks:
iShares Silver Trust ETF:
ROI for 2024:
Silver: (29.53 – 23.24) / 23.24 × 100% = 27.1%;Pan American Silver Corp. stocks: (22.10 – 17.45) / 17.45 × 100% = 26.7%;First Majestic Silver Corp. stocks: (8.90 – 7.35) / 7.35 × 100% = 21.1%;Wheaton Precious Metals Corporation stocks: (54.62 – 42.93) / 42.93 × 100% = 27.2%;iShares Silver Trust ETF: (27.32 – 21.51) / 21.51 × 100% = 27.1%.
All assets generated positive ROI, exceeding the US inflation rate of 3.4% in 2024. Wheaton Precious Metals and the XAGUSD pair performed best.
ROI for the five years from 2020 to 2024:
Silver: (29.53 – 18.34) / 18,34 × 100% = 61.0%;Pan American Silver Corp. stocks: (22.10 – 16.03) / 16.03 × 100% = 38%;First Majestic Silver Corp. stocks: (8.90 – 8.82) / 8.82 × 100% = 0,9%;Wheaton Precious Metals Corp. stocks: (54.62 – 33.10) / 33.10 × 100% = 65%;iShares Silver Trust ETF: (27.32 – 18.02) / 18.02 × 100% = 51.6%.
A five-year ROI varies across assets. Wheaton stocks and silver delivered the strongest performance. Their returns exceeded the cumulative inflation rate of approximately 19% over the period.
ROI for the 10-year period from 2015 to 2024:
Silver: (29.53 – 15.70) / 15.70 × 100% = 88.1%;Pan American Silver Corp. stocks: (22.10 – 11.10) / 11.10 × 100% = 99.1%;First Majestic Silver Corp. stocks: (8.90 – 6.58) / 6.58 × 100% = 35.3%;Wheaton Precious Metals Corp. stocks: (54.62 – 20.25) / 20.25 × 100% = 169.7%;iShares Silver Trust ETF: (27.32 – 13.48) / 13.48 × 100% = 102.6%.
Over the 10-year period, all instruments except First Majestic Silver stocks delivered high ROI, exceeding the cumulative inflation rate of 29%. The Wheaton Precious Metals stock remained the top performer.
How to invest?
Silver investments are divided into:
investments in physical silver (coins and bars);direct investment in depersonalized silver, for example, by opening an unallocated metal account, buying derivatives (ETFs, futures);indirect investments, such as purchasing stocks of companies associated with the extraction, processing, or sale of silver.
Silver Coins
Silver coins are cheaper than silver bars because they weigh less. On the other hand, due to their light weight, the coins have the highest markup compared to silver exchange quotes. So for every dollar invested in coins, an investor will receive an average of 20% less silver compared to buying on the exchange.
There is no VAT when buying silver coins. However, if the investor has made a profit, paying personal income tax when selling is necessary.
As a rule, coins are purchased for a long period, from five years or more. Their price depends mainly on two factors, the current silver rate and the duration of storage. Thus, purchases during the period of minimum exchange prices for silver and sales a few years after a prolonged price rise serve as the ideal investment in silver coins. Given the dynamics of the silver price, which increases on average every five years (during annual purchases in the same month), it is possible to save capital or even make money on investments in coins with the right approach.
Investment coins are a means of payment along with standard coins, as they are issued only by central banks. However, if the central bank removes them from circulation, they will become a standard product, so it will be necessary to pay VAT when buying or selling such coins.
When investing in coins, proper storage conditions are important. Since if there are defects, the sale price decreases.
Silver Bars
A bar is a tangible asset. It is possible to buy silver bars through a bank and from individuals. When buying, you do not need to pay VAT. However, personal income tax must be paid when selling if the investment is profitable.
A silver bar has a simpler design than a gold bar, so its value is closer to the metal price. Also, the higher the bar weight, the lower the markup. If the bar weighs more than 1 kg, the overpayment will be about 10% compared to the metal’s price. On the other hand, large bars cannot be divided, which means that it will not be possible to withdraw part of the investment less than the cost of one bar.
When buying bars from hand, check the weight and purity of the metal with a specialist to minimize the risks of buying low-quality bars.
To make profitable deals, compare the price of the bar with the price of silver on the stock exchange. Experts recommend considering purchases in March or June.
Unallocated metal account
An unallocated metal account is an investment method according to which investors do not need to hold silver in physical form, as in the case with bars or coins. The difference with a regular bank deposit is that when opening an unallocated metal account, investments are not stored in currency, but in an equivalent amount of silver.
Some banks allow traders to convert silver assets from one unallocated metal account to another (concerning different metals), as well as transfer metal to bars.
Working conditions with unallocated metal accounts may also vary. For example, in Switzerland, it is necessary to pay VAT when opening an unallocated metal account in any metal other than gold, and an account falls under the insurance program. In Russia, opening and maintaining an unallocated metal account is usually free, but there is no possibility of interbank transfer from one unallocated metal account to another. In the United States, possessing unallocated metal accounts for more than a year falls under the collection category with a corresponding tax of 28%.
In my opinion, the main advantage of unallocated metal accounts over physical metal is the lower or no costs of maintaining a silver account and storing the metal.
Otherwise, unallocated metal accounts are less convenient than CFDs, except for the possibility of converting them into physical metal.
Silver ETFs/Futures
Silver futures and ETFs are instruments that are traded on exchanges.
ETF is a security that allows traders to get a share in an investment portfolio. In the case of silver ETFs, this is the share of the portfolio of silver mining companies. iShares silver trust (#SLV) serves as an example of such an ETF. The chart below shows #SLV returns over the last five years:
When investing via ETF, investors may not form their own securities portfolios. Buying instruments will be more expensive than buying an ETF with the same set. Consequently, the investors get the opportunity to receive the same percentage of income with a smaller amount of money required for the investment.
ETF management fees are lower than those of mutual funds.
Silver futures is a contract to buy silver at a certain price in the future. Therefore, it is a derivative financial instrument whose underlying asset is silver. As an investment object, it allows traders to earn on the rise and fall of the price, since it is possible to enter both long and short futures trades.
The duration of the futures contract is three months. If the trade is not closed or extended, a physical delivery will be made.
The main expenses of investing in futures are:
Silver CFDs
Trading both CFDs and futures, the parties make a profit or loss from the difference in the opening and closing prices of a transaction. The main differences between CFD and futures:
the second party to the contract is a broker, not another investor;
CFDs do not have expiration dates. Therefore, CFDs are more profitable for long-term investment than futures. Their investment horizon is equal to the duration of the contract (three months).
When trading CFDs, there is no commission for opening and closing a trade, but there is a fee for carrying over a position to the next day.
The five-year Silver CFD chart is shown below:
CFDs are very similar to iShares silver trust ETF, aren’t they?
CFDs have lower margin requirements than futures due to the larger leverage. Therefore, silver trading or investment requires less capital than investing in futures. At the same time, this can be a disadvantage for beginners who have difficulty with risk management.
It is possible to trade CFDs through the MetaTrader trading terminal or the online terminal on the broker’s website.
The instrument is suitable for any investment horizon, from scalping on small timeframes to long-term investment over a year.
Silver stocks
Buying shares in silver mining companies is an indirect investment in silver. Shares are not directly related to the metal but are sensitive to fundamental factors that affect the silver rate, such as production volumes and logistics.
Let’s consider some major mining companies that are publicly traded.
Pan American Silver Corp.
This is a Canadian company engaged in silver mining in Latin America. It is one of the largest miners in the world with a market capitalization of more than $8 billion in 2021.
First Majestic Silver Corp.
Another company from Canada. It is also engaged in silver mining as well as gold mining and silver bullion production. Production facilities are located in Mexico and the USA.
Wheaton Precious Metals Corporation
This company (ticker #WPM) is also registered in Canada. It is engaged in wholesale purchases of metal from other mining companies. The company mainly buys silver from mines in Mexico (40%) and Portugal (20%).
7 Reasons to invest in Silver
To achieve positive investment results, it is necessary to have a more objective look at the situation. Silver can be used both to earn and save money, but not at every moment and in every economic situation. Let’s consider the arguments for investing in silver.
Silver Preserves Wealth
In the medium term, investing in silver instruments at least allows to overtake inflation. In addition, during geopolitical uncertainty or global crises, the demand for silver as an investment asset increases, which drives up its price.
Precious metals like silver or gold are used by investors as a safe haven during times of high inflation.
Silver as a Hedge Against the dollar and fiat money
Silver is inversely proportional to the USD, that is, the stronger the US dollar, the greater the possibility of lowering the silver price. Therefore, it is reasonable to enter the USD trade first and then consider opening an opposite silver trade for hedging purposes.
Silver as a Safe Haven
Silver has intrinsic value as it is a material that is used in industries to produce microchips, medical equipment, and jewelry. As long as silver is in demand, its price cannot drop to zero.
Portfolio Diversification
Silver has a strong correlation with the US dollar and with the US Treasuries (federal loan bonds). Therefore, investments in any of the silver instruments can be used to diversify almost any portfolio.
High volatility
Silver, like any metal, is known for its wide price fluctuations. This allows investors to earn the desired profit percentage faster than trading low-volatility instruments like the SP 500 index.
Wide range of instruments
There are four ways to invest in silver. First, directly through bars, coins and other products. Secondly, through unallocated metal accounts, funds and derivative financial instruments. Thirdly, through the stocks of companies associated with silver. Finally, through these stocks’ derivatives.
Price
Silver has the lowest price among the metals available for investment. The price ratio of gold and silver is approximately 1 to 85. Therefore, XAG is used for both small and large investments.
7 Reasons not to invest in Silver
Let’s talk about the disadvantages of investing in silver. Some of them are visible even with a superficial analysis of the price chart. Below you will learn about seven problems that arise when investing in both physical and exchange-traded silver.
Large price drawdowns
Historically, silver has lost more than 50% in value several times in a short period of time. It may take several years to recover from such drawdowns, which is psychologically uncomfortable. For a faster recovery, it may be necessary to buy more silver on the fall, but this will significantly increase the risks.
Compared to inflation-adjusting bonds, also known as floaters, silver has a higher profit potential. But floaters have almost zero risk of drawdowns. At the end of the year, even a small, but almost guaranteed yield on bonds can cover the potentially negative yield of silver investments.
Decline rate
Collapses in silver prices are not only big but fast. This is typical for highly volatile instruments. Investors may not have time to close the trade according to the rules of risk management, and then their losses will be greater than planned.
Market volatility
Unlike indices, silver prices rarely have long-term trends, so a buy-and-hold strategy is not suitable for XAG. Investors need to have sufficient competence to choose the right investment horizon to avoid a long period of opposite price movement.
Low trend frequency
Silver has an impulse dynamics of price movements. In other words, a large and rapid rise or fall is usually followed by a long period of non-directional movement. Silver can be in the sideways trend for years and, therefore, will only be suitable for short-term trades. Thus, there will be no return on funds invested in the medium or long term.
Numerous factors to consider
The silver price is affected by both industrial and investment demand. Thus, in order to make a correct medium- and long-term forecast, it is necessary to monitor and analyze a large number of factors. For example, the state of the US economy, the strength/weakness of the USD, the situation in the mining industry, inflation, gold price dynamics and much more. As a result, based on this data, it is quite difficult to come up with an investment decision to buy or sell silver.
Markup
Physical silver is sold with a markup to the exchange price. It can reach 3% for bars, and 10% for coins. When trading bullion it is necessary to pay for storage. Thus, investing in physical silver is likely to become long-term.
Low liquidity
The silver exchange market is not characterized by large trading volumes. In the case of a large purchase, traders may need to look for sellers at higher price levels, which will worsen the average open price of the trade.
Also, due to low liquidity, a wide spread determines investors’ strategy towards catching trends and refusing counter-trend trades.
Silver Alternatives for Investments
First of all, it’s gold. In terms of pricing structure, it is similar to silver, as it depends on industrial and investment demand. It should be noted that the investment demand for gold prevails over the industrial one. The distribution of investment capital between gold and silver diversifies investments. Thus, silver will be more correlated with the situation in the industry and gold with investor sentiment. Gold can be purchased in the form of bars and coins, which will be more expensive than silver.
Platinum can also be used as an investment. It is a precious metal that is used in industry and jewelry. However, compared to gold and silver, the platinum market is low-liquid due to a narrow market and scarcity. The global economic situation and changes even in one sector of the economy can significantly affect its rate (for example, in the automotive industry, where platinum is actively used). On the other hand, low liquidity leads to high volatility. Thus, platinum can be a good investment in some cases due to the high potential return, but it will be associated with high risks.
Palladium is also considered an alternative to silver. Industrial demand for PA also outstrips investment demand (as in the case of silver). It is even less liquid and even more volatile than platinum. This is because the palladium market is even narrower, and PA reserves in the world are 15 times less than those of platinum. If you consider palladium as an investment, I recommend choosing a short-term investment.
Oil (WTI, Brent) is also a good investment option. It is possible to invest both through derivative instruments and indirectly through shares of oil companies. Oil futures are highly liquid and volatile. It is convenient to analyze oil fundamentally since there is practically no investment demand. The main influence on the oil price is provided by current production volumes and OPEC future plans.
I would not consider stocks and cryptocurrencies investments as alternatives to silver since they do not have intrinsic value, unlike other metals or materials. Both stocks and cryptocurrencies can be used for investment, but they are mostly speculative instruments, which means they are not supported by demand from the real sector of the economy. The prices of stocks and cryptocurrencies will follow the market, in most cases, which means that these instruments cannot be used as a safe haven during economic turmoil.
Which is Better to Invest in Gold or Silver?
Silver and gold are among the oldest investment assets. In recent decades, interest in these metals has grown not only among central banks and jewelry companies, but also among retail and institutional investors. Interestingly, silver often outperforms following periods of strong gains in gold. Let’s examine the key differences between these two metals from an investment perspective.
Required Capital
The gold price is significantly higher than that of silver. Therefore, investing in bullions, coins, or gold ETFs requires larger capital. In this regard, silver is more affordable, allowing investors to start with smaller amounts and diversify their portfolios more easily.
Liquidity
Gold has traditionally been considered a more liquid asset, supported by consistent demand from central banks, hedge funds, and ETFs. However, in recent years, silver’s liquidity has increased significantly, driven by a broader range of financial instruments and rising industrial demand. Today, both gold and silver boast high trading volumes and tight spreads.
Volatility
Silver is generally more volatile than gold, responding more quickly to economic shifts, particularly in industrial sectors. Over the past 20 years, gold’s volatility has been lower than that of the stock market, including the S&P 500, while silver often experiences sharp price fluctuations. As a result, gold is seen as a more stable asset, whereas silver attracts active investors and traders.
Stability
Gold has shown a smaller maximum drawdown (around 45%) compared to silver (up to 76%). Gold is used as a reliable safe-haven asset in turbulent times. However, silver can appreciate faster during periods of economic growth and technological advances.
Portfolio Diversification
The gold price is mainly determined by investment demand, whereas silver is 50% dependent on industrial consumption in sectors like electronics, solar panels, and medicine. This means that silver correlates more strongly with the business cycle and the real economy. At the same time, when added to a portfolio, gold provides better protection against market shocks, while silver can enhance returns in a rising market.
A Good or bad time to invest in Silver right now?
Silver is growing steadily in 2025, settling above $36 per ounce. Since the beginning of the year, the asset has appreciated by 30% due to a silver shortage and the rapid development of green energy.
Against this backdrop, investor interest in silver has increased significantly, and analysts do not rule out further gains towards $40–$50. These developments make the asset appealing not only to short-term traders but also to long-term investors.
Based on technical analysis, silver may continue to trade in an uptrend, supported by strong industrial demand. Despite potential short-term corrections, it is currently risky to open short trades.
Price chart of XAGUSD in real time mode
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