Silver outshines gold as prices hit lifetime highs ahead of Diwali: Should investors buy or wait for a correction? Here's what experts say

As the festive season approaches, investors traditionally turn to precious metals such as gold and silver, long seen as symbols of wealth and stability. This Diwali, market observers suggest the focus should not be on choosing between the two metals but on assessing whether further investment in precious metals is prudent after their recent sharp rally.“At this point, it is not important which metal looks more attractive for returns. A more important question is whether investors should bet heavily on precious metals after such a strong rally. In my opinion, investors should be cautious while investing in precious metals this Diwali. They may look to buy physical gold or silver for auspicious reasons in the festival and avoid taking significant bets. Having said that, if we follow the historical Gold-Silver ratio, Gold is more expensive as compared to Silver here,” said Pallav Agarwal, Certified Financial Planner, Bhava Services LLP, according to an ET report.Experts point out that while silver currently offers better value, its industrial usage introduces cyclical risks, whereas gold remains a dependable hedge and safe-haven asset. “Valuation-wise, silver remains the more compelling investment compared to gold. However, we must also recognise that silver is predominantly utilised in various industries, functioning almost like a sector fund. Conversely, gold has established itself as the most resilient commodity during global uncertainties and continues to be the most preferred store of value,” said Rajesh Minocha, Certified Financial Planner (CFP) and Founder of Financial Radiance.

While physical gold and silver remain popular, many investors are turning to financial instruments like Gold or Silver Funds, Gold and Silver ETFs, or mutual fund FoFs for exposure without handling the metals physically. Minocha recommends ETFs or mutual fund FoFs for investment purposes, while physical gold may still be suited for festive buying.However, recent disruptions in the silver market have prompted caution.

Four mutual funds—SBI, Tata, Kotak, and UTI—recently suspended fresh subscriptions to their silver ETF FoFs due to a significant domestic premium caused by scarcity in India’s physical silver supply. “Due to a recent anomaly in the prices of Silver ETF, one should avoid buying Silver through ETF or FoF and prefer buying in physical. This caution does not apply to Gold, where investors may continue to buy ETFs for ease of holding and liquidity,” Agarwal added, quoted ET.According to ETMarkets, both metals saw fresh highs on Tuesday, October 14, with gold futures at Rs 1,26,299 per 10 grams and silver at Rs 1,60,000 per kilogram on the MCX. The gains were supported by safe-haven demand amid fresh US-China trade tensions, economic uncertainties, and expectations of further US rate cuts. “With today's gain, both precious metals hit their lifetime highs, supported by expectations of US rate cuts, steady central bank buying, and sustained safe-haven demand amid global economic uncertainties,” the report noted.On whether this is a suitable entry point, Agarwal emphasises strategic allocation. “Investors should follow their strategic asset allocation while investing in precious metals. If their holding is too low, they may start buying in a staggered manner from here. Investors who already have a decent exposure in this asset class should wait for corrections to add more.” Minocha adds that short-term reversals are possible but market timing is rarely effective.

“If global turmoil persists, gold may continue reaching new all-time highs. Therefore, the best approach is to adopt a staggered or SIP-style strategy with gold or silver ETFs or mutual fund FoFs to manage volatility while participating in the long-term trend.”Data from Axis Mutual Fund shows silver ETFs have seen a record surge, tripling inflows compared with gold ETFs, as silver prices rose 53% so far in 2025, while gold rose nearly 49% during the same period.

Global silver-backed ETFs added about 95 million ounces in the first half of 2025, exceeding total inflows of the previous year and taking total holdings to ~1.13 billion ounces (worth over $40 billion) by mid-year.Domestic demand for silver has surged ahead of Dhanteras and Diwali, traditionally the peak period for buying precious metals. In September, silver imports nearly doubled from the same month last year as jewellers and dealers scrambled for inventory, creating a short-term supply crunch.

Gold ETF inflows also hit a record in September, surging 282% month-on-month to Rs 8,363 crore.For long-term wealth building, Minocha recommends gold as a cornerstone for preservation and inflation protection, while silver can deliver higher returns during bullish phases but carries higher volatility. “Commodities investments should not exceed 8–10% of the overall portfolio, and investors should maintain significant holdings in equity mutual funds if their time horizon is at least five years,” he added.Agarwal highlights silver’s current edge over gold: “Historically, the gold-silver ratio hovers around 55. Currently, this ratio is more than 80, suggesting that Silver is more attractive as compared to Gold at current levels. Moreover, Silver has high demand in manufacturing sectors, especially electronics manufacturing, which gives it an edge over gold.”