With gold and silver prices scaling new peaks every other day, investor interest in increasing in these asset classes, as evident in record inflows in to exchange traded funds. But which of them has delivered better returns over the long term?
businessline analysis of gold and silver price data for the last two decades shows that both move in the same direction, with a high correlation of 0.95. But gold has delivered slightly higher returns over the long term and has also been less volatile.
Silver: High Returns, High Drama
Silver’s average annual return for the period between 2006 and 2025 (till September 9) is about 15.6%, which is identical to gold’s performance. But the real story is in its volatility. The swings in silver prices are sharp and often extreme, with a standard deviation in annual returns of around 31%.
This means silver can deliver dazzling gains, but also punishing losses. For instance, it delivered 109 per cent annual return in 2011 and 63 per cent in 2006. But it registered annual losses in 9 out of 20 years with highest loss of 20 per cent in 2014.
Its five-year rolling return is a modest 9.4%, trailing gold despite the fireworks in individual years. For short-term traders or those willing to stomach turbulence, silver can be exciting. But for investors seeking steady wealth building, its roller-coaster pathway can feel like a gamble.
Even in the exchange-traded fund (ETF) space, silver has shown dramatic growth in assets under management (AUM). Since its debut in 2022, silver ETFs have expanded rapidly from about ₹1,500 crore in 2022 to nearly ₹25,300 crore in 2025, a staggering 156% CAGR. But this surge is partly because the base was so small, and the sustainability of such growth remains to be tested.
Gold: Steady Strength
Gold tells a different story. With an average annual return of about 15.6%, it matches silver in annual growth, but does better in consistency. Its annual volatility, around 15%, is less than half of silver’s. This makes gold far more reliable as a store of value.
Over rolling five-year periods, gold has also fared better, with an average CAGR of about 12.2%, comfortably ahead of silver. In other words, gold hasn’t just been steady, it has also compounded more efficiently.
Investor behaviour reflects this trust. Gold ETFs, which had assets of around ₹5,800 crore in 2019, have ballooned to nearly ₹72,500 crore in 2025, growing at a powerful 52% CAGR. Unlike silver, this growth is on a much larger base, underscoring gold’s entrenched position in investor portfolios.
The Verdict
When stripped to its essence, the story is simple. Gold and silver have given investors similar average returns. But gold has done so with far less drama, compounding steadily and commanding investor confidence. Silver, in contrast, has been volatile and speculative, rewarding the brave but punishing the unprepared.
For long-term portfolios, gold remains the anchor. Silver, while gaining popularity through ETFs, works better as a tactical play, a temporary holding for those willing to chase opportunity, but not a substitute for the steady shine of gold.
Published on September 14, 2025
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