Any investment in the metal is poised to generate handsome profit as the demand of the white metal will gather further momentum as economies open up across the globe.
In the last one month, while gold has given a return of 3.59 per cent, silver, on the other hand, has given a much higher return of 10 per cent. Silver price was Rs 61,654 per kg on October 12 and it has gone up to Rs 67,016 per kg per gm in a span of a month. Gold, on the other hand, has gone up to Rs 49,003 per 10 gm from Rs 47,335 per 10 gm.
Sensing that silver is gaining importance in the investing community, the Securities and Exchange Board of India has recently allowed silver exchange traded fund (ETF) and has amended the rules only last week to bring in more transparency.
“While gold is more of an investment commodity, silver is both an investment as well as industrial usage commodity,” said Joydeep Sen, fixed income consultant at Phillip Capital. With revival of the global economy, silver application is expected to increase going forward and can be made a part of portfolio allocation.
“A point of note, retail investors should not attempt trading, that is, chasing a price through ETFs, unless you are in the thick of it,” he said.
Portfolio allocation approach is advisable, said financial advisors. The futures contracts on various commodities at the exchanges are beyond comprehension of retail investors. ETFs or Fund of Funds with ETFs will make it easily accessible to retail investors. Gold is already an option with investors through ETFs and sovereign gold bonds, but the same is not the case with silver.
Chintan Haria, Head Product and Strategy ICICI Prudential AMC, added “With the growing financialisation, Silver ETF will be one more tool along with Gold ETF through which investors can participate in commodity markets in a meaningful way. Since silver is bulky in nature and hence difficult to store, we believe the ETF form will be one of the preferred ways for investors to take exposure to silver in financial investment form.”
Analysts are positive about silver even though a slowdown in Chinese industrial activity remains a concern for the metal, which has a wide range of industrial usage. “However, long term outlook still remains positive as economic recovery continues and amid increased use of silver in industrial application and increasing emphasis on cleaner energy,” said Ravindra V Rao, VP- Head Commodity Research, Kotak Securities.
Silver has many industrial uses, accounting for more than half of the annual demand worldwide. This means that economic growth can affect silver prices far more than it affects gold. Only 10-15% of annual gold demand worldwide comes from industrial use, the rest is used for jewellery and investment.
Read More:silver price today: Silver may set the new gold standard for your portfolio. Here’s why
2021-11-15 06:42:00
