Silver’s rally raises timing risks: ICICI Prudential AMC explains how to invest in the metal now

Silver prices have risen nearly 188% over the past year, prompting investors to reassess whether it is still prudent to add exposure after the sharp rally.

Chintan Haria, Principal – Investment Strategy at ICICI Prudential AMC, said the long-term investment case for silver continues to rest on two factors: its role as a hedge during periods of macro uncertainty and its linkage to industrial growth. However, he cautioned that the pace of the recent rise increases the risk of near-term volatility.

Haria said fresh lump-sum investments at current levels require caution, as sharp rallies are often followed by drawdowns.

Investors without any exposure may consider a staggered approach to building positions, while those already invested should remain aligned with their asset allocation framework.

Why rebalancing matters after a sharp run-up

According to Haria, rebalancing is the most practical response when an asset appreciates sharply. Ifsilver’s weight in a portfolio

has moved above the intended allocation, trimming exposure can help bring risk back in line and lock in part of the gains.

Silver prices remain sensitive to global interest rates, the US dollar, and shifts in risk sentiment, which can lead to sudden reversals even when the longer-term outlook remains constructive.

Rebalancing, he said, is not a call on price direction but a risk management exercise.

FOMO risk and ETF flows

Haria said the sharp rally increases the likelihood of fear-of-missing-out driven flows, particularly into Silver ETFs.

Such late-cycle flows can amplify short-term corrections if positioning becomes crowded.

In the near term, Silver ETFs may see volatility linked to global liquidity conditions, US rate expectations, and currency movements. Over the longer term, silver’s industrial linkage and hedge-like characteristics continue to support its relevance as part of a diversified portfolio.

Demand outlook and preferred investment routes

Silver demand is expected to remain structurally supported by its growing use in solar power, electrification, electronics, and other industrial applications, Haria said. At the same time, industrial demand is cyclical and can soften during periods of slower global growth, contributing to price volatility.

For most investors, he said, regulated market instruments such as Silver ETFs or Silver Fund of Funds are the preferred route to gain exposure. Systematic investment plans can help reduce timing risk, while lump-sum investments may be more appropriate during corrections or when portfolio rebalancing calls for it.

Haria said exposure to gold and silver combined should typically remain within 10–15% of a portfolio, with asset allocation discipline guiding investment decisions rather than recent price movements.