Precious
metals like gold and silver hold financial and emotional value for most
Indians. Buying, holding and selling has become increasingly
difficult. So, when paper gold in the form of Gold ETFs was launched, it was an
effective way of transacting in the yellow metal without the trouble that comes
with physical gold. Investors now have the option to invest in Silver ETF.
Mutual funds are ready
to flood the market with silver exchange traded funds (ETFs) and silver
fund-of-funds (FoFs).
At least
half a dozen mutual fund houses are in the race to launch exchange traded funds
and fund of funds based on silver; SEBI gave its go-ahead to silver ETFs in
September 2021.
An ETF tracks an index,
commodity or a sector which can be traded on a stock exchange just like shares.
A fund-of-fund invests in some other mutual funds. In case of silver FoFs,
these will invest in silver ETFs.
"Industrial
demand for silver is huge and around 50% of silver mined globally is used in
industrial applications and products. Thus, unlike gold which is considered as
a pure hedge product, the prices of silver can get affected during economic
crises, slowdowns and market falls especially when the industrial demand for
silver is low or muted,".
Silver investment for huge returns?
Investors looking at
trading in silver or expecting extraordinary returns from investments, may not
like the idea of investment in ETF. “Returns from investing in silver ETF will
be in line with the returns from investing in silver bars, minus the fees and
the tracking error.”
Investing in silver is
expected to reap better benefits than gold during recovery times. “Silver
usually outperforms gold during economic recovery cycles in the longer run such
as post-pandemic,”.
Why Invest in Silver?
·
Getting started to invest in silver is very easy. Physical
forms of silver like coins can easily be purchased from banks and jewelers
near you. For small size investors, this is a big boon.
·
Storage of physical silver is easy as well. You can buy
silver jewelry and silver coins and store them at your home. There is no need
to worry as you would when storing gold jewelry.
·
Silver is used a lot in industries around the world. In the
year 2017, industries consumed 59% of the total silver produced. If you have
any paper forms of silver investments with you, the future looks good for you.
Since silver mcx price is determined mainly by the market, this is a
trend that will help all silver investors.
·
Silver is relatively less risky. If you have invested in
silver in the form of a portfolio, this is good news for you because silver
will help to mitigate your portfolio’s risk. This is mainly because MCX
silver’s prices don’t fluctuate in value too much.
·
There are many ways you can invest in silver. If you wish to
go by the traditional route, buy silver bars, silver coins, and silver jewelry.
Buy them and sell them when you need to. If you would rather not deal with
physical silver, there are paper forms of silver too like silver futures, NSEL,
ETF and many more.
SIP for as low as ₹100
Nippon Life India Asset
Management, said investors can start Systematic Investment Plan of as low as
₹100 in silver FoFs; most broking firms facilitate SIP in ETFs.
What Makes Price of
Silver Move?
Silver tends to be sensitive to
interest rates, inflation, and energy prices, just like gold, though the
sensitivity may vary.
Industrial activity, demand-supply
forces worldwide, the movement of the rupee against the dollar, mining supply,
and inflation are some of the prices determining factors.
Silver tends to play "follow
the leader" behind gold with a small lag.
When it comes to investing in
silver keep in mind that it moves every 6-8 years in spurts and makes big gains
or losses.