Why Silver ETFs Outperformed Gold in 2025 and Why the Trend Will Continue

In 2025, silver ETFs delivered a striking 98.9% return, outpacing gold ETFs' 60.2% gain over the same period. This divergence reflects a broader shift in commodity demand dynamics and structural advantages in silver ETFs. While gold remains a cornerstone of safe-haven investing, silver's dual role as an industrial and investment asset has positioned it to capitalize on the global green transition and evolving ETF mechanics.

Commodity Demand Dynamics: The Industrial Silver Surge

The outperformance of silver ETFs is rooted in its surging industrial demand, particularly in solar photovoltaics (PV) and electric vehicles (EVs). According to a report by the Silver Institute, solar PV accounted for 17% of global silver demand in 2024. China's 45% year-on-year increase in solar capacity alone underscored the sector's dominance, even as manufacturers sought to reduce silver usage per panel. Meanwhile, the EU's target of 700 gigawatts of solar capacity by 2030 ensures sustained demand.

Electric vehicles further amplify this trend. EVs require 67-79% more silver than internal combustion engine vehicles, with 25-50 grams of silver per unit used in battery management systems and power electronics. With EV production projected to make up 59% of automotive silver demand by 2031, industrial applications are becoming the primary driver of silver's value proposition.

This industrial demand contrasts sharply with gold's traditional role as a hedge against inflation and geopolitical risk. While gold's stability remains attractive, its price is less sensitive to cyclical economic growth, limiting its upside in a world increasingly focused on decarbonization and technological innovation.

ETF Structure Efficiency: Liquidity, Costs, and Supply Constraints

Structural efficiency in silver ETFs has also fueled their outperformance. The iShares Silver Trust (SLV), with $23.8 billion in assets, offers high liquidity and an active options chain, making it a favored vehicle for tactical investors. Its 0.50% expense ratio, while higher than the abrdn Physical Silver Shares ETF (SIVR)'s 0.30%, is offset by its ability to facilitate options strategies like covered calls. SIVR, meanwhile, boasts a transparent structure that minimizes premiums or discounts by directly holding physical silver.

Crucially, silver ETFs have exacerbated supply-demand imbalances. By locking away 95 million ounces of silver in the first half of 2025 alone, these funds have reduced mobile inventory, intensifying structural deficits that have persisted for seven years. This dynamic, combined with silver's dual role as both an investment and industrial commodity, creates upward price pressure.

Gold ETFs, by contrast, face fewer supply constraints. Physical gold remains more accessible for industrial users, and gold ETFs like the iShares Gold Trust (IAU) are less sensitive to liquidity-driven price swings. However, this also means gold ETFs lack the amplifying effect of ETF-driven scarcity seen in silver.

The Road Ahead: Structural and Cyclical Tailwinds

Looking forward, silver's trajectory appears firmly bullish. Forecasts suggest prices could rise from $38 in 2025 to $67.29 by 2030, driven by industrial demand and investment inflows. The gold-silver ratio of 91-a-measure-of-how-many-ounces-of-silver-it-takes-to-buy-an-ounce-of-gold-suggests-silver-is-undervalued-relative-to-gold,-offering-potential-for-a-corrective-rally-if-global-industrial-activity-accelerates. Structural factors will further support silver's ascent. As renewable energy and EV infrastructure expand, silver's role in the green transition will cement its status as a critical metal. Meanwhile, ETFs will continue to amplify its price action by reducing available supply and attracting retail and institutional investors seeking exposure to a more volatile but higher-growth asset class.

Conclusion

Silver ETFs' 2025 outperformance over gold ETFs reflects a confluence of industrial demand growth and structural efficiency in investment vehicles. While gold retains its safe-haven appeal, silver's integration into the global economy's decarbonization agenda and its unique supply-demand dynamics position it as a superior long-term investment. For investors seeking both cyclical and structural upside, silver ETFs offer a compelling case.