Why Silver ETFs are the new jewel in smart investors’ portfolios
Tue Jan 14 2025
Silver ETFs have emerged as a modern and efficient way for Indian investors to invest in one of the most versatile metals. Indian investors already have Rs 14,000 crore riding on these special metal exchange traded funds. Combining the benefits of affordability, security, and convenience, these ETFs provide an opportunity to diversify portfolios without the challenges of owning physical silver.
Silver ETFs and their appeal
Silver ETFs are exchange-traded funds that allow investors to gain exposure to silver’s value without owning it physically. Listed on stock exchanges, these ETFs make trading as simple as buying or selling shares (ETFs require a demat account).
Investing in physical silver often comes with concerns about storage, theft, and insurance costs. Silver ETFs solve these issues. Backed by high-purity silver—99.9% in most cases—they ensure safety and transparency. The silver is stored securely with custodians regulated by SEBI, giving investors peace of mind.
Unique role of silver as an asset
Silver holds a dual identity. It is both a precious metal and a critical
industrial commodity (60% demand from industry). Its uses span industries like
electronics, renewable energy, and automotive manufacturing. This broad demand
makes silver a versatile and valuable investment option.
Economic growth, especially in technology and clean energy, continues to drive silver’s industrial demand. Industrial demand surged 11% in 2023, and another 9% in 2024 to nearly 711 million ounces. In fact, India is estimated to have imported about 8,000 tonnes in 2024. This ensures consistent demand, which can enhance its investment appeal.
Additionally, silver is considered a hedge against inflation and economic
uncertainty. Much like gold, silver retains
value during volatile market conditions
Valuable addition to your portfolio
Diversification
is a key principle of investing, and Silver ETFs are an excellent tool for
achieving it. Adding silver to a portfolio of equities, debt, or gold can
reduce overall risk. Silver has a low correlation with Indian stock
indices, making it a stabilising asset.
In inflationary periods, silver can act as a hedge. Its ability to retain value
protects your portfolio’s purchasing power. For long-term investors, Silver
ETFs provide an opportunity to capitalize on silver’s industrial growth while
safeguarding against market volatility.
Conclusion
The current market environment presents a favourable opportunity for silver
ETFs as the underlying metal witnesses strong demand. Since March 2020, the
price of silver has significantly outperformed many other commodities, driven by
a combination of industrial demand, investment interest, and macroeconomic
factors.
The post-Covid environment fuelled a surge in investment demand for silver as a
hedge against inflation and economic uncertainty. Additionally, silver’s
critical role in the booming renewable energy sector, particularly in solar
panel production, and the growing use in electronics further bolstered its
price.
Investors seeking a mix of safety, growth, and convenience should consider
adding silver ETFs to their portfolios. For Indian investors looking to
diversify, protect against inflation, or tap into industrial growth, silver
ETFs are a smart, secure, and efficient choice.
Source: https://economictimes.indiatimes.com/