Silver ETFs invest in 99.9% purity silver and track the domestic price of silver.
Global push for green energy, solar panels, and EVs has increased the industrial demand for silver.
The supply of silver remains limited as it is produced as a mining by-product.
With demand consistently exceeding silver supply, silver ETF performance and returns are likely to benefit.
Over the last year, silver offered gains of around 160%, outshining gold’s returns of about 80% domestically in 2025
(Source: Economic Times).
Much of this growth was due to the rising industrial demand for silver in the green energy market -particularly for EVs and solar panels. In this article, we assess how this green energy boom has impacted silver ETF performance and what it means for investors.
Table of Content
What are Silver ETFs?
A silver exchange-traded fund is a type of fund that pools money from multiple investors to invest in physical silver and track its spot price (subject to tracking errors). The silver ETF buys physical silver of 99.9% purity and stores it with a custodian bank as per SEBI requirement.
Investors benefit because they gain exposure to silver without actually physically holding or storing the asset. You can buy and sell silver ETFs like regular shares on the stock exchange. Silver ETF returns depend on the price of silver in the domestic market, which is a result of several factors, including the green wave.
How is the Green Energy Boom Driving Silver Prices?
Silver is one of the most crucial elements in leading the green energy boom. The white metal has electrical conductivity properties that make it irreplaceable in modern green technologies. Among the various green energy techs using silver, solar and EV are the two most prominent ones:
Role of Solar Energy Demand
The thin metallic lines visible on the surface of a solar panel are made using a special silver paste. This paste carries the electricity produced by the cell to the external circuit, allowing the solar panel to deliver usable power efficiently.
Silver is used in solar panels due to its three important properties:
Very high electrical conductivity.
Excellent thermal conductivity.
High resistance to corrosion.
According to recent data, solar PV manufacturing is now one of the fastest-growing sources of silver demand (Source: United States Gold Bureau). Some key trends that highlight this growth include:
Silver demand for solar panels went up from 11% in 2014 to 29% in 2024
(Source: The Silver Institute)A study published in the Resources, Conservation, and Recycling journal states that the solar industry alone would need 321 to 450 million ounces of silver by 2030.
India also aims to achieve 280 GW of solar power by 2030 to meet its renewable energy goals (Source: IBEF), supported by government initiatives like the PM Surya Ghar: Muft Bijli Yojana.
So, as countries expand clean energy capacity and pursue net-zero goals, solar-related silver demand is expected to remain strong.
Rising EV Demand
Silver is also one of the important metal in the electric vehicle (EV) ecosystem. It is used in batteries, charging systems, power electronics, switches, and various electrical connections because of its excellent conductivity.
A few factors are driving silver demand from this segment:
Battery electric vehicles use significantly more silver than conventional petrol or diesel vehicles.
On average, EVs contain around 67-79% more silver per vehicle due to their higher dependence on electronics and power management systems
(Source: The Silver Institute).Silver consumption from the automotive sector is expected to rise from around 80 million ounces in 2026 to about 94 million ounces by 2031
(Source: Economic Times).
With countries encouraging cleaner transportation options and aiming to reduce dependence on fossil fuels due to rising geopolitical tensions, the industrial demand for silver for EVs is likely to continue growing.
Understanding the Supply vs. Demand Dynamics for Silver
Apart from high green energy demand in solar and EVs, the rising price of silver is also due to a structural supply squeeze. Just like any commodity, when demand exceeds supply, silver prices also rise.
Now, silver’s supply restrictions are primarily twofold:
A significant part of silver demand is industrial, which means the silver is permanently consumed and does not circulate back into the system.
About 70% of silver is actually produced as a by-product of copper, zinc, and lead mining. This is why silver production cannot be scaled up to meet higher demand, leading to a supply shortage.
How Does the Growing Green Energy Demand Impact Silver ETF Performance?
As mentioned earlier, silver ETFs track the market price of silver. So when the price of silver rises due to high green energy demand and limited supply, silver ETF performance may also benefit:
Higher EV and solar energy demand + limited silver supply → Rise in silver spot price → Potential rise in silver ETF returns
Therefore, if you are buying silver ETFs, you should keep these key return drivers in mind.
Looking Beyond Green Drivers: What You Should Understand About Silver ETF Returns
While the green energy wave is an important factor driving the industrial demand for silver, silver ETF performance are not driven by a single trend. So before you decide to buy silver ETFs, here are a few key points you should note about silver ETF performance:
Silver ETF performance are not driven only by green energy demand. Silver is both a precious metal and an industrial metal. This means prices can also be influenced by factors such as manufacturing activity, electronics demand, central bank interest-rate decisions, and defensive buying during periods of economic uncertainty.
Silver ETFs may sometimes trade at a premium to their NAV: This means the market price of a silver ETF can temporarily be higher than the value of the silver it holds due to strong investor demand and low supply. This may happen due to import delays, higher festive demand, and supply chain bottlenecks.
Silver prices can be more volatile than gold: Since silver is both a precious metal and an industrial commodity, its prices can fluctuate more sharply depending on changes in economic activity, industrial demand, and investor sentiment.
Understanding these factors can help you set realistic expectations while investing in silver ETFs.
Considering Silver ETFs and Silver ETF FoFs? Here Are a Few Options Offered By Tata Mutual Fund
If you’re looking for investing in silver, there are two primary ways to do it:
Through silver ETFs directly
Through a silver ETF fund of funds
Tata Mutual Fund offers both these options:
The Tata Silver ETF scheme allows you to invest in silver ETFs directly. Here are all the key details of the scheme:
Scheme Type | An open-ended exchange-traded fund replicating/tracking the domestic price of silver. |
Scheme Investment Objective | The investment objective of the fund is to generate returns that are in line with the performance of physical silver in domestic prices, subject to tracking error. However, there is no assurance or guarantee that the investment objective of the Scheme will be achieved. |
Exit Load | NIL |
Benchmark | Domestic price of silver |
Scheme Riskometer | Very High Risk |
Benchmark Riskometer | Very High Risk |
Tata Silver ETF Fund of Fund
If you wish to gain exposure to the white metal through a silver mutual fund, you may consider the Tata Silver ETF Fund of Fund. Here are the key details on this silver ETF fund of funds scheme:
Scheme Type | An open-ended fund of fund scheme investing in the Tata Silver Exchange Traded Fund. |
Scheme Investment Objective | The investment objective of the Scheme is to seek to provide returns that are in line with returns provided by the Tata Silver Exchange Traded Fund. However, there is no assurance or guarantee that the investment objective of the Scheme will be achieved. |
Exit Load | 0.5% when redeemed/switch out/STP/SWP on or before expiry of 7 days from the date of allotment |
Benchmark | Domestic price of silver |
Scheme Riskometer | Very High Risk |
Benchmark Riskometer | Very High Risk |
Conclusion
The green wave of rising solar panels and EV demand has acted as a one of the major tailwind for silver prices. This, coupled with a limited supply of silver and growing manufacturing demand in other sectors, has impacted silver ETF performance.
While these factors may be a key driver of silver ETF performance, there are still other key elements like geopolitical stability, currency, and governance policies like customs and tariffs that can impact silver ETF prices and thereby it’s performance.
As an investor, you should understand that silver ETF returns tend to be potentially more volatile and take cautious investment decisions that suit your investment goals and risk tolerance.
FAQs
Are silver ETF returns more volatile than gold ETFs?
Yes. Silver ETF returns can be more volatile than gold because silver has a dual role. It is valued as a precious metal, but it is also widely used in industries such as solar energy, electric vehicles, and electronics. As a result, changes in industrial demand, investor sentiment, and the limited supply of silver can lead to sharp price movements and fluctuations in returns.
Can I invest in silver ETFs through SIPs?
While direct SIP investments in silver ETFs is not allowed, some platforms may allow investors to follow a SIP-like investment approach through stock SIPs. If you don’t want to open a Demat account and start silver SIPs, you can also choose to invest in a silver ETF fund of funds through your existing mutual fund account.
Can silver prices continue to benefit from the green energy transition?
The growing use of silver in solar panels and electric vehicles is expected to support long-term industrial demand. However, silver prices will also depend on factors such as supply, global economic conditions, and investor sentiment. Therefore, silver ETF prices and returns are not guaranteed and cannot be predicted.
*Mutual Fund Investments are subject to market risks, please read all scheme related documents carefully.
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