SEBI registered Investment advisor (RIA) with Registration number – INA 000000342.
Why to invest in Silver?

Silver has traditionally been considered the poorer cousin of gold. Silver is often compared to gold as a precious metal, but what makes it such an interesting investment is it’s industrial use. While gold and silver prices have tended to follow each other over time, silver, over a long historical period, has outperformed gold.

Demand and Supply factor

Silver is produced throughout the world. But the primary source of silver is not the silver mines. Silver mines produce around 25% of the total world production of silver. Rest is derived as a by- product from gold mines, copper mines, lead and zinc mines and other sources. The total demand for silver in the world is around 29,000 tons while the production is much less than this.

The silver prices have almost doubled in 2010.This rally has been driven by investment demand in the safe havens like the still recovering US and Europe economies. In addition, industrial demand for silver in the emerging markets is increasing the prices.

Indian Scenario

India hardly produces any silver and is primarily a silver importing country. Over 50% share of silver import in India is from China. In India, investor’s have limited ways to invest in silver. While Gold ETFs are popular, asset managers are not allowed to hold silver directly in ETF or mutual fund form, leaving investors no choice but to buy silver futures. Also jewellery has been a source of demand for silver and with gold prices at their current levels, more and more demand is going to be there for silver ornaments.

Why E-Silver?

The National Spot Exchange Limited (NSEL) has introduced E-series products in commodities. To start with, they have launched E-Gold and E-Silver.

Investing in E-silver is as simple as buying equity shares. You have to open a demat account for this. Clients interested in buying E-silver need to transfer sufficient money to their respective broker before placing the order. Once the money is transferred, one needs to call the broker and place the order. After the execution of the purchase order, silver is transferred to client’s demat account in T+2 days.

If the client wishes to sell his holdings, he should transfer it to the broker’s designated account and place the sell order through the broker. After the order’s execution, funds are transferred to client’s account in T+2 days.

Options to take physical silver

If the investor is interested in taking the physical delivery of silver against his holdings, he can surrender his holdings to the exchange and get physical delivery of silver subject to certain conditions. Delivery is offered in specified denominations and at specific locations only. Presently delivery of physical silver is available at all Metros and few other cities. The exchange will keep on expanding the number of centers in future to offer physical delivery.  It is available for delivery in multiples of 100gm, 1Kg and 5Kg.

Conclusion

Silver tend to appreciate with a growing economy (because of the industrial demand) while gold will appreciate when economy is going down or slow. Silver can occupy a small portion in your total portfolio and investing through E silver will be a better option. This will help you to accumulate Silver in smaller quantities over a period of time.

You must keep a watch on the business cycle movement and its effect on silver prices to get the best out of it. While price movements in gold will be slow and steady, the price movements in Silver can be steep. Recent correction can be used as an opportunity to start investing in Silver with a long term investment horizon.

11 Comments

  • ATMA RAM KEJARIWAL Posted May 29, 2011 3:24 pm

    REQUEST DETAILS OF BROKERS IN DELHI FOR TRADING E – SILVER.
    ALSO REQUEST BROKERAGE STRUCTURE.

    • Finvin Posted May 30, 2011 12:22 pm

      You can contact commodity brokers like Religare or Kotak. Brokerage is around 0.5% on both the sides.

  • Karan Batra Posted June 2, 2011 11:44 pm

    With the Fluctuations that are seen in Silver these days, Investing is not advisable. Low volumes on Silver lead to high fluctuations and a normal investor may be not able predict the correct buying price.
    So despite its uses, we are not advising our clients to be investing in Silver

    • Finvin Posted June 3, 2011 12:30 pm

      I agree with the fluctuation in silver prices.This is the reason, why I have mentioned the following in the article.
      1. Invest only a small portion of your investable surplus in Silver.
      2. Invest regularly to average out the cost.
      3. Buy with a long term view.
      4. watch out and exit at the right time to encash the price fluctuation.

  • JITENDRA KUMAR Posted June 4, 2011 1:04 pm

    what should be bying price in your opinion otherwise what bottomout price doi u expect in silver so that i can invest in it.thanks

    • Finvin Posted June 7, 2011 1:21 pm

      The price of Silver was growing like anything and now, it has corrected reasonably. Being a metal, with lot of industrial applications, it’s price movements are sharp compared to Gold. It is always better to limit your exposure to Gold and silver within 10% of your total savings. nobody can predit a buying range in the case of metals like silver.Onlything, youy can do is to accumulate in small quantities regularly and book profit once you get decent appreciation. But start investing in Silver after building a decent portfolio in equities, which gives almost steady returns in the long term.

  • Dilip Kulkarni Posted June 7, 2011 2:00 pm

    What do you expect the price of silver with 2 -3 year timeline in mind. In last 3 months the prices have yo-yoed from a high of nearly Rs. 70000 to current price of Rs. 56000. Is there a thought of the prices reaching near the 1 lakh mark in near future, say by Diwali. Would there be a dip before that?

    • Finvin Posted June 7, 2011 6:21 pm

      The Price of Silver will move up with a growing economy because of it’s industrial applications.The recent correction can be taken as a good entry point to invest in it with a 3-5 year time frame.But remember that the volatility is very high in the price movements of silver. Best strategy will be to invest in small quantities for long term and book profit, once you reach your price target.I cannot predit anything before Diwali,because, for short term, it is very risky. Start investing in Silver, only after building a decent portfolio in equities and limit your investments in commodities to 5-10% of your total portfolio, unless you are a seasoned trader.

  • Chasidy Goldis Posted November 6, 2011 9:18 pm

    Silver investments are really picking up steam and ill tell you why. Silver is now trading at about $34 which is a significant amount lower than its inflation adjusted all time highs. We all know that the economy has been having a lot of trouble lately.To top it off the use of Silver in manufacturing has increased, What this means is that the amount of silver that is unrecoverable has increased and supplies are depleted (because of the prohibitively high price of extracting silver after its been used in manufacturing applications). This means only one thing that silver prices will sky rocket and there will be no down side on the horizon. We were initially unsure ourselves if we were going to allocate a lot of our funds into gold or silver but after a thorough analysis of the silver markets we have made our moves strongly into the silver market but that’s not to say that gold has been forgotten

  • Joesph Dutter Posted March 7, 2012 11:01 am

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  • vinodh Posted July 16, 2012 2:13 pm

    Hi,
    I came to this site thru other popular website in india. i saw link to this site from that popular site . your site layout is very good and informative. I am a novice on investments.
    regards
    vinodh

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