Trading in silver till date in the Indian market is very cumbersome. Unlike Gold, retail investors have restricted options to deal in silver. For several years, the decision was marred with whether silver ETFs should be overseen by SEBI or the commodity markets regulator, the Forward Markets Commission.
As on date investors have below options to trade in silver:
- Through commodity exchange which is marred by daily fluctuations resulting in adjustments in bank account or positions being squared off;
- Buying in physical form;
- Investments in silver ETFs outside India through authorised Indian agencies.
However on 28th September, 2021, SEBI decided to give its go ahead for the launch of silver exchange-traded funds (ETFs) by amendment to mutual fund rules.
Comparisons between silver ETFs over physical silver are as under:
- Genuineness – Trustworthy source is the prime consideration in case of physical silver. In case of ETFs the same is taken care of by professional custodians.
- Convenience – Physical silver involves finding a buyer, transaction costs and time. Buying and Selling of silver ETFs is through click of computer mouse.
- Storage – No brainer as to who wins between physical silver and silver ETFs.
- Smaller demonization – Investment in ETFs is possible even in smaller demonization as compared to its physical counterpart.
- Tracking errors and price differentials: There will be price differential between physical silver and silver ETFs on account of extra expenses like the fund manager’s fee and others and tracking errors which will impact the returns.
NPowersU Team Expert Opinion
On SEBI approval, Gold ETFs were first launched in the year 2007. It received good response from investors too. Demand for silver ETFs was long pursued by all. Finally inequality between the yellow metal and white metal ends.
Now people can authoritatively say
‘Every cloud has a silver and gold lining.’
Related Links:https://www.outlookindia.com/newsscroll/sebi-to-tweak-fit-and-proper-criteria-to-introduce-silver-etfs/2168968