Increasing geopolitical tensions after the US-Israel strikes on Iran have once again pushed investors towards long-time safe haven assets. Many traders are struggling to choose whether they should go for gold ETFs or towards silver ETFs, or allocate their portfolio to a combination of both.According to market participants, current environment favours gold, although silver could still play a complementary role in portfolios.
Siddharth Srivastava, head at ETF Product & Fund Manager, Mirae Asset Investment Managers told ET that in periods of heightened geopolitical stress, gold ETFs typically acts as the primary safe-haven, while silver ETFs participates in risk-off moves but is influenced more by industrial demand so holding both can offer balance of stability and tactical upside, however one should have relatively higher allocation towards Gold ETFs.Shivam Pathak, CFP and Founder of Asset Elixir, shared a similar view, saying that in a geopolitical conflict like the US-Israel-Iran situation, gold ETFs are the safer option as it is a pure safe-haven asset and reacts quickly to uncertainty. Silver ETFs may also rise, but its industrial exposure makes it more volatile, so holding both is fine, but gold ETFs should have a higher allocation.ETMarkets reported that gold prices surged up to 4%, or Rs 6,700, to trade at Rs 1.68 lakh per 10 grams on the MCX on Monday. The report added that after witnessing a steep correction last month due to multiple factors, the latest rally leaves the yellow metal just 12% below its record high of Rs 1,93,096.MCX gold futures due April 2026 were up over Rs 5,811, or 3.5%, at Rs 1,67,915 per 10 grams. Meanwhile, silver futures for March 5, 2026 delivery soared Rs 9,492, or 3.5%, to Rs 2,84,490 per kg.What should be your allocation?Both experts indicated that investors may consider allocating 10–15% of their overall portfolio to precious metals ETFs, with a higher tilt towards gold for stability.Rising geopolitical uncertainty has made investors more cautious, leading to a shift of funds away from equities into relatively safer assets such as gold and silver. Earlier this year, precious metals witnessed a strong bull run amid Trump’s tariff flip flops and other uncertainties, before undergoing some correction.Another ETMarkets report noted that more than 20% of the world’s oil passes through the Strait of Hormuz, which connects the Persian Gulf with the Gulf of Oman and the Arabian Sea. Heavy missile strikes around the region have heightened concerns about supply constraints, triggering a spike in oil prices.How global factors influence the metalsPathak explained that a stronger US dollar usually puts pressure on both gold and silver and gold is more sensitive to interest rates and currency movement.He added that when crude oil rises, inflation concerns increase, which generally supports gold and silver is affected by these factors too, but it also depends on global economic growth, making it more volatile.Srivastava said that gold has a strong inverse relationship with the US dollar and real yields and it acts as a long-term hedge against inflation, which gets affected by crude whereas silver is affected by these factors as well, but global growth expectations influence it more due to its industrial usage.Recent performanceIn the last one month, gold ETFs delivered a negative average return of 0.50%, while silver ETFs posted a negative average return of 23.43%. Over the past one year, gold ETFs returned an average of 83.39%, compared with 175.38% from silver ETFs.What’s the outlook for near-term?On volatility, Srivastava said that while globally situation is fluid, typically silver ETFs are more volatile given its smaller market size and relatively higher participation from derivatives and speculative flows.He added that in the near term, gold ETFs seem attractive from a risk reward point of view, amid geopolitical uncertainty, while silver ETFs could see sharper swings depending on risk sentiments, speculative flows and industrial demand signals.Pathak maintained that silver ETFs are likely to remain more volatile in the near term due to their dual nature whereas gold ETFs outlook stays supportive amid geopolitical and macro uncertainty so metals should be held with a five year horizon as portfolio hedges, not short-term trades.(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India)
