Mr. Sharma is investing in the stock markets for the last 5 years. He is quite satisfied with his returns. But while reading a commodity report he was surprised to know that Silver has given more than 100% return in last one year alone. In terms of annual return, it is much higher than even gold!
Like Mr. Sharma it may come as a surprise to you as well but it is true that silver is shining and it can be a good option to bet on in the days to come.
Factors behind Silver run-
- Unlike gold, silver is widely used for industrial purpose.
- There is Growing jewelry demand in India
- On the back of soaring inflation investors are betting on safe haven commodities like silver. There is a strong investment demand for silver backed exchange traded funds.
- Gold is already touching a new high; in such circumstances some of the investment is shifting to Silver
Why should I invest?
For a balanced portfolio you need to diversify your investment. Experts believe that commodity should constitute around 10-20 per cent of your overall portfolio. So gold and silver are good options. As gold is already touching new highs, you can opt for silver for both diversification and possible better returns.
Is it right time to invest?
If you are a long term investor you should wait for some time as experts feel that metals will see a correction in near future. However, fundamentally silver is looking good as unstable geopolitical situation, weaker currency and soaring inflation are pushing prices world over. There were predictions in February 2011 that silver might touch Rs. 70,000 per kg mark in next 1 to 2 years, but it happened much before that. So if you are still planning to invest, wait for a correction. If you are already invested, you can remain invested for 3-5 years. But if you are a short term investor, you can wait till it touches Rs. 55,000 per kg mark.
How can I invest?
Traditional way of buying silver through your jeweller is not a good option from investment point of view. Purity and storage can be a major problem in case of silvers bars and coins. As silver ETFs are still not available in India, buying through e-silver is the best option.
How can I invest through e-silver?
- You have to open a commodity trading and demat account with a member of the National Spot Exchange. They will charge you Rs.100-Rs.150 as stamp duty. Annual cost of a demat account is between Rs.300 to Rs.500. Besides you have to pay 0.25%-0.50% as broking transaction charge and 1% (of total purchase value) as VAT charge for taking delivery across the country.
- Commodity demat account is different from equity demat account.
- You can place an order for a minimum of 100 gms of silver.
- The trade is settled on T+2 days. After that you will get silver in your account.
- You can also take physical delivery by applying for it. You have to pay Rs 200 as delivery charge.
| SILVET ETF
Unlike Gold, silver ETFs are still not available in India as the matter
is stuck in regulatory disputes. Typically, ETFs are also traded on
equity exchanges. While Gold ETFs are regulated by equity market
regulator, Securities and Exchange Board of India (SEBI), the Silver
ETFs are argued to be regulated by Forward Markets Commission (FMC), the
commodities market regulator in India. Companies are waiting for an
approval from the regulators. The matter is currently pending with the
Comparison between gold and silver?
Over the past one year while gold has given a return of 25%, silver prices have appreciated over 100%. Gold prices rose from 16,000 to 28,000 per 10 grams while silver prices surged from 27,000 to 60,000 per kg. Even since the beginning of this year Silver has given a 80% return.