Raghav Mehta explains why silver’s volatility is now a portfolio opportunity for institutional investors
Silver is staging one of its strongest bull phases in recent memory, pushing through multi-year highs in 2025 amid liquidity squeezes and institutional demand spikes.
Raghav Mehta isn’t surprised because he believes this metal’s dual identity as both precious and industrial could mean bigger implications for long-term allocators, including pension funds.
The timing is notably ironic, considering it’s Halloween and the precious metal has been known to ward off and purify evil spirts; while silver bullets have also purged evil, typically once and for all.
“The current snapshot is silver is in a bull phase right now and has positively repriced materially higher versus other metals,” said Mehta, VP and ETF strategist at Global X. “It pushed silver to multi-year record highs amidst the liquidity squeeze in London and there was also heavy buying from ETF providers in the silver market. Silver rallies are accompanied by substantially larger pullbacks as opposed to gold. But silver’s smaller investable market means flows from ETF providers or institutional demand have more positive price impact.”
In Mehta’s view, the current supply-demand imbalance - marked by structural deficits and record industrial usage in sectors like solar, electronics, and electrification - justifies increasing silver allocations beyond historical norms.
According to Mehta, silver carries significantly more volatility than gold - roughly 1.5 to 2 times as much, both in realized and implied terms. This heightened volatility stems from silver’s smaller investable market, large industrial demand, and periodic supply dislocations.
That volatility isn’t just academic as it shows up in deeper and more frequent drawdowns. Over the past four decades, Mehta explained, silver has experienced 18 corrections of 10 per cent or more, compared to just four for gold. And when markets pull back, silver can fall harder, with maximum quarterly losses reaching nearly 31 per cent, versus gold’s typical 21–23 per cent range.
Mehta characterizes silver as a "hybrid" asset that straddles both the safe-haven qualities of gold and the cyclical upside of industrial commodities. While it can serve as a flight-to-quality trade, its exposure to industrial demand means it behaves differently than gold—offering more upside during commodity cycles, but also more volatility and stronger correlations with equities. While gold continues to serve as a strategic hedge and flight-to-safety asset, Mehta emphasized silver’s hybrid appeal.
“It’s not a replacement for gold,” Mehta said, “but if you want an all-in-one metal, silver has that characteristic. It has qualities of a precious metal but also it has very, very widespread industrial uses.”
He also points to portfolio construction models that support a greater allocation to silver than what most investors currently hold. According to Mehta, independent research finds that an optimal silver allocation should be materially higher than the current average holdings, roughly four to six percent of a multi-asset portfolio. This is still lower than typical gold weightings, but significantly above where most portfolios stand today, he noted.
While he suggests this makes sense for long-term portfolios, tactical investors can tactically overweight into silver during tight physical markets like the current one, he said.
Additionally, what sets silver apart, Mehta argues, is its volatility, which not only introduces risk but also income potential through strategies like covered calls ETFs.
“Silver gives you that higher volatility, hence higher option premium income, hence higher monthly distributions,” he said. “You can also use your option overlay strategies or covered call strategies to monetize that volatility for income.”
These strategies not only avoid the logistical burden of physical silver but also help buffer some of the asset’s inherent volatility. While Mehta acknowledges that silver positions tend to be smaller than core equities due to risk concerns, he argues that covered call strategies can provide a middle ground, offering exposure while softening drawdowns through premium income.
Silver’s volatility stems from both market structure and fundamentals, explained Mehta. Because most silver is a byproduct of base metal mining, supply is less responsive to price increases. This limited supply elasticity - combined with rising demand from tech, AI hardware, and photovoltaic manufacturing - supports a bullish outlook.
He sees silver moving from the margins of asset allocation to a more central role, especially as economic uncertainty deepens and commodities regain relevance in diversified portfolios. Once treated as a niche, tactical bet, silver is increasingly being viewed by institutional investors as a hybrid asset with both inflation-hedging properties and real-world industrial utility.
For yield-focused investors facing a declining real rate environment, these products are emerging as a way to substitute lost income from traditional fixed income assets. Mehta anticipates more managers will launch similar strategies to tap into this opportunity.
Still, he expects the gold rally to persist, at least through mid-2026, driven by falling real yields, central bank accumulation, and heightened geopolitical tensions, adding that some banks have even lifted their targets to as high as $5,000 per ounce.
He draws a distinction between gold’s traditional safe-haven status and its evolving momentum-driven appeal. Where geopolitical shocks and trade wars once anchored gold demand, retail investors are now increasingly driving the trade.
“We are going into the second innings where it’s becoming a momentum trade,” he said.
He warns, however, that silver's liquidity risks are very real as recent surges in ETF inflows and concentrated holdings in key vaults like London and COMEX have created localized shortages, driving up borrowing and leasing rates. These conditions can sharply move prices in either direction. Mehta sees this volatility as an opportunity for income-focused investors. Still, while industrial growth cycles benefit silver, a sharp global slowdown could quickly reverse its gains.
“All of that is a positive in booms but also can be riskier if there’s a big recession coming,” said Mehta.
