Gold and silver exchange traded funds have had a rough month. After a dazzling rally, gold ETFs are down by over 6% on average, while silver ETFs have slid nearly 9%. Investors are left wondering whether to jump ship or stay invested.Market experts, however, urge calm and a long-term view. Systematic Investment Plans (SIPs) in these metals, they say, are a smart way to ride out volatility rather than attempting to time market highs and lows.In the last month, gold ETFs lost an average of 6.51% across 39 funds. LIC MF Gold ETF FoF led the fall with 7.91%, while LIC MF Gold ETF fell the least at 5.33%. Silver ETFs, spanning 27 funds, fell more sharply, averaging a 9.18% decline. Kotak Silver ETF recorded the biggest drop of 9.99%, with DSP Silver ETF FoF losing 6.81%.
Why the precious metals plunged
Globally, easing US–China trade tensions and a cautious Federal Reserve have reduced safe-haven demand for precious metals. A stronger dollar and profit-booking after recent rallies added pressure. Domestically, gold prices had surged above Rs 1.34 lakh per 10 grams in October, prompting profit-taking. Silver ETFs saw additional pressure due to a temporary shortage of physical silver in India. Post-Diwali, as supply normalised, some silver ETFs dropped as much as 7.9% in a single day.
Long-term outlook — What analysts suggest
Despite recent short-term losses, experts maintain a constructive view on gold and silver as long-term investments. Shweta Rajani, head of mutual funds at Anand Rathi Wealth Management, highlighted the difference between precious metals and equities. “During a dip, investors should adopt a wait and watch approach unless they are using these metals as a substitute for debt. In such cases, if the holding period is long term, the dip can still be considered a viable buying opportunity and Gold remains the only meaningful alternative to debt, while silver should not be viewed as a viable replacement or investment.”She further told ET that gold and silver respond more to demand than earnings, unlike equities, making them behave differently in downturns.Varun Gupta, CEO of Groww Mutual Fund, emphasized that investing in precious metals is best approached systematically and with a long-term perspective. He advised against trying to time short-term market fluctuations, noting that any investment should align with long-term financial goals rather than being driven solely by temporary price movements.“A gradual rebalancing is recommended if the recent correction has pulled precious-metal weights below one’s intended allocation.”Meanwhile, Kaustubh Belapurkar, director of fund research at Morningstar Investment Research India, advised a measured approach. The analyst advised investors against buying gold and silver solely based on recent price trends. Incorporating gold or silver up to 10% of a typical 75% equity and 25% fixed-income portfolio, by trimming the equity portion, can help lower overall portfolio volatility, Kaustubh suggested. A systematic, phased investing approach is recommended instead of making a lump-sum investment.Gold ETFs have delivered solid returns in 2025, averaging 57.25% year-to-date, with UTI Gold ETF leading the pack at 59.01%. Over the last 12 months, gold funds offered an average return of 60.16%, demonstrating their resilience even after recent corrections, ET reported.Silver ETFs have outperformed gold, posting an average gain of 74.52% this year so far, with ICICI Pru Silver ETF achieving 76.03%. Over the past year, silver ETFs offered an average return of 68.20%, with HDFC Silver ETF topping the chart at 70.34%.Tata Mutual Fund reports that as of October 2025, the total assets under management (AUM) of gold ETFs in India stood at $11.3 billion. October alone saw gold ETF inflows of $849.8 million, while overall demand increased by 6.1 trillion, highlighting sustained investor interest.Several global factors underpin the long-term outlook for these metals. Rising safe-haven demand triggered by geopolitical events such as the US government shutdown, proposals to designate silver as a critical mineral in the US, and heightened interest from major buyers including Saudi Arabia and Russia have strengthened the investment case.The gold-to-silver ratio fell to 80.66 in November from 82.20 in October, suggesting silver is relatively undervalued compared with gold. Varun Gupta noted that central banks have consistently increased their gold reserves, while silver has experienced a supply deficit for five consecutive years, with demand outstripping supply. These structural factors, he says, provide a solid long-term foundation for both metals.Shweta Rajani, head of mutual funds at Anand Rathi Wealth Management, emphasises their role as stabilisers rather than wealth creators. Rajani further told ET that going by the trends, the yellow metal can act as an alternative for the debt portion of a portfolio, but it cannot compete with equity for long-term growth and silver shows even weaker long-term potential and does not justify a meaningful allocation for investors.
