New Delhi, Nov. 3 -- If last year's silver rally tempted you to join in, this year's slide offers a sobering lesson. Silver ETFs have corrected more than 50% from their highs earlier this year, leaving investors who entered near the peak nursing steep losses.

The reversal underscores why silver should remain a small part of a diversified portfolio. Driven by both industrial and investment demand, the metal can be highly volatile. Experts attribute the recent correction to the unwinding of speculative positions and rising US bond yields, which have dulled the appeal of non-yielding assets such as silver.

Silver prices are driven by two factors: industrial demand and investment demand. "Right now both drivers are seeing some pullback. Ind...