Why it makes sense to invest in Silver?
Silver has yielded returns (CAGR) of 10.2% over past thirty years.
The demand for silver comes from two forces: industries and safe haven. Unlike Gold, Silver acts as both precious and industrial metal which makes the demand highly desirable for investors.
Silver is used in many industries like manufacturing, electrical and electronics, pharmaceutical and food industry. Therefore, there is high consumption of silver. Bull phase of silver will not be over until industrial manufacturers find a replacement for what is being consumed the most.
Apart from the industrial usage, macro-economic factors like interest rates, budgets, demand-supply imbalance, etc also support move in silver prices. So it is wise to invest in silver at this point of time to gain maximum of profits in future.
How to invest in Silver?
There are number of ways you can invest in silver. Below are listed few
Jewellery/Coins/Bars: Owning silver physically in the form of jewellery, coins and bars is the traditional way to invest in silver. That enables investors to secure large amount of wealth in relatively small area. Coins and bars are mainly sold by retailers and banks such as HDFC Bank and Scotia Bank have also started selling the same. Buying physical silver comes with the risk factor of purity, so investors should go for the certified products provided by branded retailers and banks.
E-Silver: National Spot Exchange Ltd (NSEL), the spot trading platform of Multi Commodity Exchange (MCX), allows you to invest in E-Silver through which you can invest in silver electronically provided you should hold Demat Account. You can also opt for physical delivery of Silver if you want. It allows you to buy in small quantities which can be as less as one unit i.e. 100 grams and physical delivery is available in multiples of 500 grams.
Silver Futures: Silver Futures is the another way of getting exposure to silver. You can invest through the derivatives market by buying silver futures. Silver Futures comes under the highly leveraged area, where participation comes from the hedgers and speculators.
As it attracts high risk and high return profile, you need to be well versed with the subject and also need to have ample time to track the demand and supply situation. Silver futures are generally traded in one day and they usually have a very quick turnaround period, so the chances of rapid loss are more as an unexpected crisis could turn the price around overnight.