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What a global economic crisis mean for Silver ETF investors in India


Exchange-traded funds (ETFs) are considered more powerful hedge against inflation when economies are on the rise.. Investors prefer gold and silver when it comes to investing in precious metals. Silver ETFs were first launched in January 2022 in India, while gold ETFs have been available to Indian investors since March 2007. 

What is Silver ETF? 

Silver ETF is an exchange-traded fund that invests its underlying assets up to 95% of its corpus in physical silver that tracks the price of silver in the stock exchanges. With silver ETFs, investors need not worry about purity or quality of the underlying asset and it is also free from storage-related hassles.

Given the situation where inflation remains sticky, silver could perform well, said Chintan Haria, head-product development and strategy, ICICI Prudential AMC.

“With global central banks indicating slower interest rate hikes, economic upswing led commodities like silver look interesting. The price history of silver shows that during times of rising inflation, there can be an uptick in silver prices. In addition, silver being a precious commodity has delivered during times of crisis. In each of the past three periods of crisis (Subprime mortgage, taper tantrum and Covid -19) which affected global financial markets, silver has outperformed equity as an asset class,” said Chintan Haria.

Haria believes that investment in Silver ETFs enables improving the overall risk-adjusted return of the portfolio.

“Investors can consider a 5% to 10% allocation to silver as a part of their portfolio. Investors with a Demat account can consider investing in the Silver ETF form and those without a Demat can consider investing in the Silver Fund of Fund route,” said Haria.

Amid strong global trends, gold price rose 352 to 53,677 per 10 grams in the national capital on Thursday. Silver also rallied 1,447 to 65,003 per kilogram.

“Gold and silver price posted one of their biggest monthly gains, after US Federal Reserve Chair Jerome Powell’s speech reinforced expectations of smaller interest rate hikes ahead,” PTI quoted Navneet Damani, Senior VP – Commodity Research at Motilal Oswal Financial Services.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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