4 Reasons To Include Silver In Your Portfolio

While silver is prized for its functionality and beauty, investors are now viewing it as a valuable financial investment opportunity. 

Silver is rapidly gaining recognition for the unique combination of industrial significance, low cost, and an increasingly global demand.

Though many investors consider it just cheaper gold, the reality is that silver has its own place in a diversified portfolio. 

Whether you invest in silver stocks or go the direct route via silver bullion, exchange-traded commodity, or futures, you can lower the risk and improve the returns of your portfolio by adding silver to it. 

In what follows, here are 4 reasons why you should invest in silver and also why a silver investment plan should belong in your portfolio. 

1. Silver Is A Store Of Value

An asset is a store of value when you can hold it for years and decades without its value diminishing. Silver is one of such assets; it has been trending upward over the past 100 years. 

Silver’s role as a store of value results from its demand-supply dynamics. The demand for silver continues to increase, driven primarily by industrial demand. 

Silver is an important raw material in the production of solar panels, electric vehicles (EVs), and 5G electronics. Given the focus on renewable energy, the industrial demand for silver has been increasing. 

On the other hand, the supply of silver hasn’t caught up with its demand, creating a deficit that supports rising prices. 

Thus, as long as this dynamic persists, silver prices will continue to rise, reinforcing its role as a store of value. 

2. Silver Is A Safe-Haven Asset

A safe-haven asset can hold on to its value when the prices of other assets (especially equities) are falling. 

Silver has maintained or increased its value during periods of geopolitical tensions, financial crises, and economic uncertainty. 

During the 12 key geopolitical tensions between 1979 and 2024, silver’s price continued to rise. For example, when Russia invaded Ukraine, silver’s price went up 17% between January and May 2022 while the S&P 500 fell by 13.3%. 

Also, during the Great Financial Crisis and the European Debt Crisis (2008-2012), silver produced a total return of 495%, holding its own while global stock markets cratered. 

3. Silver Can Help Diversify Your Portfolio

Silver also has low correlation to traditional assets like equities and bonds, which makes it a good portfolio diversifier. 

However, silver’s role in the portfolio goes beyond risk reduction. During periods of economic uncertainty and crises, silver tends to outperform even gold. 

Also, given that the gold/silver ratio is above its historical average, many analysts expect a correction that would see silver outperform gold in the short to medium term. 

Furthermore, the alignment of silver with current interests in the global economy (artificial intelligence and renewable energy) makes it a potential long-term outperformer. 

In other words, including silver in your portfolio can be a way to boost portfolio returns more than reduce its risk. 

4. Silver Can Hedge Against Inflation

Silver has also historically performed well during inflationary periods. It has a definite edge over gold because of its dual demand being an industrial and a precious metal. 

Its prices are impacted by industrial expansion, which makes them more dynamic and occasionally more volatile than gold prices. Which are mostly driven by market emotion and global concern.

During the inflationary periods between 1926 and 2019, silver produced an average annual rate of return of 12%. Also, silver had cumulative returns exceeding 1,000% during the stagflation of the 1970s. 

All of these show that silver is not merely an inferior gold. If you are interested in how to invest money in the UAE, silver can serve a role in your portfolio independently or in addition to gold. 

What Are The Pros And Cons Of Having A Silver Investment Plan?

There are certain pros and cons of investing in silver. And before you start investing in silver, create a silver investment plan. You should definitely know about the pros and cons of investing in silver. 

Pros 

1. Silver is much more affordable than gold. It is also easier to enter for retail and small investors. 
2. It has a higher industrial demand that supports long-term growth in price. 
3. Silver ETFs offer purity, liquidity, and transparency. 
4. Retail investors easily diversify the portfolio with tangible, globally traded assets. 

Cons

1. The price of silver is more volatile than the price of gold for the industrial cycles. 
2. Silver ETFs, all such market instruments, can easily face short-term price fluctuations.

Since silver is a desirable asset, if you wanna diversify your investment portfolio in 2026, as it lies at a point of traditional attraction and modern utility.  

How Profitable Is A Silver Investment Plan In The Future?

Silver is now more than simply an accessory metal; it represents the flexibility of the modern investor. 

It offers flexibility and the potential for long-term returns, whether you choose small digital purchases, mutual funds, or Silver ETFs.

Silver ETFs offer the ideal mix of growth, accessibility, and safety for most investors. They offer all the benefits of silver ownership without the practical difficulties. 

Its position as a vital industrial and investment metal will only grow as India’s technological and renewable energy sectors expand.

You may be able to capitalize on this new trend in the years to come if you know how to buy silver ETFs now. 

You can allocate 5%-10% of your portfolio to commodities such as gold & silver, keeping a long-term view.

To Sum Up!

Given that buying silver bullion (bars and coins) can be costly (storage fees, extra charges), inconvenient (transport and storage), and illiquid, you can gain indirect exposure to the asset through the stocks of silver mining companies. 

If you are in the UAE, you can buy silver mining stocks through Sarwa. This will give you exposure to the spot price of silver without the inconvenience, illiquidity, and cost ineffectiveness of silver bullion.