Silver Exchange-traded funds have been given green signal by SEBI and will compete with the already proven gold ETFs that are present in the market for a long time. Several experts in the field have welcomed the step and they believe it will provide many funds and investment diversification options for the investors. Both the precious commodity ETFs can be considered a more sustainable option during the inflation period in the Indian market. They share common characteristics which raise the question of which is the right investment?
Gold ETFs Vs Silver ETFs
Along with being a precious metal, silver has many industrial applications, and its demands spans industry, investment, and jewelry. According to a worldwide survey report, half of the silver is used in heavy industry and high technology, and other everyday electronics like smartphones, tablets, and many more. This application makes silver more sensitive towards economic changes as compared to gold. When there is a boom in different industrial sectors, it raises the demand for silver and makes it more profitable when inflation is on rising. It provides a better hedge against inflation and makes it a profitable prospect in the commodity market. Contrary, 80 percent of gold is used in making only jewelry which makes it an isolated commodity with a certain growth and less risk.
Will Silver Bring More Fortune To The Investors?
Silver is more volatile than gold as per the demand and supply and traders can benefit from such short volatility. Investments in Silver ETFs were quite popular in the Indian market via the overseas channel and the introduction of the same in the Indian market will shift a huge customer base for the Indian platform.
Is Silver, The True Gold For Investors?
In the past year, silver was down 11.6% in rupee terms. On an absolute rupee return basis, in the last decade, investors have gained ~2.1% in white metal, underperforming other asset classes like gold and stocks. In the same horizon, gold gained 76% in rupee terms, whereas Nifty50 gained 284%.Unlike gold, silver is not a \’buy-and-hold\’ asset, as it is volatile and tends to observe wild swings, making timing of its purchase and exit crucial. Silver isn’t a hedge fund like gold, investors needed to get directional bets right on same.