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How to invest in silver in India
A guide to investing in silver sources in India
While the metal’s purposes have changed throughout history, silver remains a valuable commodity with strong demand in the Indian market. Demand for precious metals generally increases in times of economic uncertainty, often correlating with a decrease in the US dollar’s value.
This guide will discuss different ways to invest in silver from India and some of the risks that you may face.
1. Buy silver ETFs
Rather than investing in the stocks of one or two companies, exchange-traded funds — or ETFs — offer the chance to invest in a basket of assets.
Compared to other popular investment methods, ETFs are simple and accessible. You can buy or sell them like stocks, but the diverse range of assets within them means less vulnerability to market fluctuations. Many ETFs in India are a safe option for newcomers to precious metals. The broad scope of different companies in silver ETFs means you can focus either on the metal itself, on silver miners — or on both.
While there aren’t any silver ETFs listed on Indian exchanges, there are plenty to choose from on other major markets. The iShares Silver Trust (SLV), for example, tracks the spot price of silver by owning physical silver bullion, while the Global X Silver Miners ETF (SIL) tracks an index of silver mining companies.
- A quick, easy and flexible way of buying, selling and trading silver in India.
- Gain far-reaching access to silver assets at reasonable prices.
- Can be safer than buying individual stocks.
- Can incur management fees, trading fees and other expenses.
- You do not take any personal custody of silver.
2. Buy silver stocks
Investing in stocks is a well-known method for approaching the market.
Silver has many modern uses, which makes it a desirable asset in multiple industries that include solar energy and electronics — and a popular commodity for investment. Silver stocks to consider in India include Vedanta Limited and Hindustan Inc. Many international silver mining and manufacturing companies like First Majestic Silver (AG) and Wheaton Precious Metals (WPM) also offer stock for purchase through online brokerage platforms and advisers.
- A lot of options to choose from.
- Control over your investment.
- Leave the market when you want.
- Stocks are vulnerable to market fluctuations.
- Valuable metals can be especially volatile, and prices may vary wildly for no real reason.
Compare online brokers to buy stocks and ETFs
3. Buy silver coins and bullion
Rather than investing in silver stocks, you may decide to invest in physical silver, in the form of silver bullion bars or coins from, to sell on your own terms at a later date.
“Bullion” refers to high-purity silver that is officially recognised as being at least 99.5% pure silver. When buying silver bullion, it’s important to remember that you are purchasing by weight regardless of whether it’s in the form of a bar, a coin or anything else. More collectible forms such as commemorative silver coins will often be much more expensive per gram than silver bars, so it’s important to check how much you’re paying by weight before buying silver.
While you have full control over the asset, buying physical silver is a longer term investment and you will have to find a buyer to realise a profit. Like other investments, physical silver prices are still influenced by the market.
You can buy silver coins and billions from trusted banks and jewelers across India. It’s up to you to decide how you want to store the physical silver. Some people keep it at home, others entrust it to a custodian. Both options have different costs and risks.
- Direct control over your asset.
- Silver looks pretty in a pile on your floor.
- Physical silver can sell at a premium compared to the spot market.
- Physical storage can be inconvenient.
- Buying physical silver in India often means paying premium prices.
- There is a risk of fraud if you buy silver online.
By investing in silver futures in India you are agreeing to buy an asset at a future set price. In other words, you are agreeing to pay today’s prices for an asset that gets delivered sometime in the future.
If the price rises between the time the futures contract is purchased and the contract expiry date, buying at today’s prices will be a profitable trade. The difference between the price you paid for an asset and its price at the time of delivery is the profit.
This system also lets traders profit from falling prices. If a trader thinks prices will drop, they can also buy a “short contract.” This means they put in an order to sell the asset at today’s prices, for delivery in the future. Now, if prices drop between the time the short contract was purchased and the contract expiry date, the price difference will be the trader’s profit for the trader.
Retail traders in India typically trade silver futures through contracts for difference (CFDs). CFDs are derivative investment products that allow you to trade on the future prices of underlying assets such as commodities, stocks and indices. Because they allow you to trade using borrowed funds (leverage) they can be highly risky and are only for more experienced traders.
- Under the right conditions futures can yield solid rewards for their investors.
- Futures and options can be used to day trade as well as make longer-term investments.
- Futures are a real gamble and if you make the wrong choices you could potentially lose a lot of money.
Compare online brokers to trade silver stocks, ETFs and CFDs
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
Why do people invest in silver?
There are two main ways investors in India think about silver’s value. One is as a practical and in-demand commodity whose properties give it many practical applications, similar to zinc or aluminum. The other is as a precious metal with a finite supply and inherent “folk value” similar to gold.
Silver prices are based on a combination of these two factors, which gives it a unique investment profile.
Silver as an industrial commodity
Silver’s chemical and physical properties, such as its conductivity and antibacterial properties, make silver essential for many electronics, healthcare and other applications.
Silver’s also malleable, ductile, reflective, relatively corrosion-resistant and not overly common, which historically made it a practical choice of metal for jewelry, coins and similar applications.
Silver as a precious metal
Silver (and gold’s) innate value as a precious metal is typically described in the context of its finite supply, or scarcity.
It’s not certain how much silver is left in the world, but some estimates suggest that Earth will run out of silver by 2050. These estimates, however, depend on a range of assumptions around silver’s continued use, how much we recycle and how likely miners are to uncover large previously-unknown sources of silver.
One economic theory holds that a commodity such as silver, which is in constant demand while having a finite supply, should carry a constantly-growing intrinsic value. Proponents of this theory will often contrast the scarcity of silver with the theoretically infinite amount of government money, such as Australian dollars, that can enter circulation.
For this reason, silver is often regarded as a hedge against inflation and currency devaluation, and its prices have been known to run opposite to the changing values of currencies.
Is silver a safe investment?
As mentioned above, silver is a staple material for many modern industries in India and there are a number of routes available for investing in it. However, regardless of which way you approach it, your investment will inevitably come with risks:
- Fluctuating prices: Valuable metals have a tendency to fluctuate in price over small periods of time, sometimes with no real cause.
- Storage: Finding somewhere to store physical silver in India can be a hassle, and storing it with a broker will come with a fee.
- Fraud: While it is tempting to look for the best prices, if it is too good to be true, it probably is. When buying physical silver, trade with reputable dealers to avoid being fleeced.
- Political and environmental events: Political and environmental issues can make the mining, refining and trading process more expensive for companies, causing price fluctuations.
You can invest in silver in India through options available to most commodities, including the purchase of silver coins and bullion itself. But be wary of fraudulent dealers when purchasing physical silver and understand the potential for market fluctuations before investing in futures.
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