Silver vs Gold: Which Precious Metal ETF Offers Better Returns in 2026?

The precious metals market has experienced remarkable momentum in recent months, with both gold and silver reaching historic peaks in December. Gold surged to an all-time high of $4,500 per ounce this week, representing approximately 70% gains throughout the year. Yet silver has demonstrated even more impressive momentum, posting gains of roughly 140% since January 1, 2025 (as of December 23, 2025), making it the standout performer between the two.

The Silver Surge: Understanding the Dynamics

Steven Orrell, vice president and portfolio manager at Orrell Capital Management and the OCM Gold Fund, explains that silver’s exceptional performance follows its traditional pattern within precious metal bull markets. “Historically, silver tends to lag gold early in a bull run and then experiences sharp catch-up rallies, which is what we’re seeing now,” Orrell noted. This catch-up phenomenon is particularly evident when examining the iShares Silver Trust (SLV), where roughly 99% of its 140% year-to-date gains materialized over just the last six months.

The gold-silver ratio—measuring how many ounces of silver equal one ounce of gold—has contracted dramatically from 104-to-1 in April to approximately 64-to-1 currently. This narrowing gap demonstrates silver’s accelerating strength relative to gold, signaling a fundamental shift in market dynamics.

Why Silver May Continue Outperforming

Affordability and Accessibility

Silver’s lower price point compared to gold makes it an attractive entry point for investors seeking precious metal exposure. Often termed “poor man’s gold,” silver enables investors to accumulate larger quantities while maintaining portfolio diversification. With 2026 anticipated to be a robust year for metals, silver’s affordability positions it well for further gains relative to gold.

Monetary Policy Tailwinds

The Federal Reserve has signaled a moderately dovish stance, with potential for easier monetary policy in 2026. As Federal Reserve Chair Jerome Powell’s term concludes in May, a new leadership appointment under President Trump—who favors lower interest rates—could accelerate rate cuts beyond current expectations. Lower rates enhance the appeal of non-yielding assets like precious metals, particularly those denominated in US dollars.

Industrial Demand Catalyst

Unlike gold, silver possesses substantial industrial applications that drive structural demand. The rise of artificial intelligence, coupled with expansion in clean energy and electronics sectors, creates sustained demand for silver’s superior conductive properties. Companies facing reduced borrowing costs will likely finance projects requiring silver, intensifying competition for available supply.

Supply-Demand Imbalance

The silver market has operated in structural deficit since 2021, with cumulative supply shortfalls reaching approximately 800 million ounces (25,000 tons) from 2021 through 2025. Demand from electrical and electronics sectors has surged 51% since 2016, reflecting silver’s position as the most electrically conductive metal. Conversely, gold demand in 2025 expanded through record investment flows and central bank accumulation, though jewelry demand weakened. Mine production increased modestly at 2% year-over-year to 977 tons.

Investment Approaches for 2026

Investors seeking precious metals exposure have multiple pathways. Silver bullion options include SLV and the abrdn Physical Silver Shares ETF (SIVR), while silver mining equities encompass the Global X Silver Miners ETF (SIL) and Amplify Junior Silver Miners ETF (SILJ). Gold investors can access bullion through SPDR Gold Shares (GLD) and iShares Gold Trust (IAU), with mining exposure via VanEck Gold Miners ETF (GDX) and VanEck Junior Gold Miners ETF (GDXJ).

Given silver’s compelling fundamentals, structural supply constraints, and favorable monetary conditions anticipated for 2026, the case for silver-focused allocation warrants serious consideration alongside traditional gold holdings.