Gold Or Silver: Which Asset Rewarded Investors Better Over The Long Term?
About Gold And Silver As Investment Assets
A BusinessLine analysis of gold and silver prices over the past two decades shows that both assets move in the same direction with a very high correlation of 0.95. Yet, gold has delivered slightly higher returns while also proving to be less volatile compared to silver. This difference has significant implications for both short-term traders and long-term investors.
Historical Performance Comparison
Between 2006 and 2025, the average annual return for both gold and silver stands at about 15.6 per cent. However, silver’s returns have been far more volatile. Silver prices can deliver spectacular gains, but also punishing losses. For instance, silver delivered a massive 109 per cent annual return in 2010 but also suffered sharp declines in multiple years. Gold, on the other hand, compounded steadily, avoiding extreme swings. This consistency makes gold a more reliable long-term store of value.
Volatility And Risk Profile
Silver’s volatility is significantly higher, with a standard deviation of about 31 per cent, compared to gold’s 15 per cent. This means silver is more suited for traders willing to stomach short-term turbulence and who seek tactical opportunities. Gold, however, appeals to conservative investors who prioritize wealth preservation and stability. Over rolling five-year periods, silver delivered an average CAGR of 9.4 per cent, while gold compounded at about 12.2 per cent, making it a more efficient long-term asset.
ETF Growth And Investor Behaviour
The ETF space has seen remarkable growth in both metals. Silver ETFs, since their debut in 2022, expanded from about ₹1,500 crore in 2022 to nearly ₹25,300 crore in 2025 — a staggering 156 per cent CAGR. However, this rapid surge is partly due to the small base. Gold ETFs, by contrast, grew from ₹8,500 crore in 2019 to around ₹72,500 crore in 2025, translating to a 52 per cent CAGR on a much larger base. This clearly indicates greater investor trust and confidence in gold as a long-term investment option.
Strategic Investment Outlook
Gold’s relatively lower volatility, steady compounding, and strong ETF demand make it a superior long-term asset for wealth preservation. Silver, while rewarding in specific periods, is best viewed as a tactical play, especially for those seeking to capitalize on industrial demand trends or short-term trading opportunities. Investors with moderate-to-high risk appetite may use silver to diversify their portfolios but should be prepared for sharp swings.
Trading Guidance
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Investor Takeaway
The comparison of gold and silver over the long term highlights gold’s superior performance in terms of consistency, compounding, and investor trust. Silver, though capable of delivering dazzling short-term gains, carries higher risks and volatility. For long-term portfolios, gold remains the preferred choice, while silver may serve as a tactical addition. Investors must align their strategy with risk appetite and investment horizon before choosing between these two precious metals.
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SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives.
