Now silver is outdoing gold in terms of performance and price movement since the March lows and are now at 4-year high of Rs. 55,000 per kg, having recorded a sharp spurt of over Rs. 2000 per kg in 2 days time. Amid coronavirus lockdown related disruption while at one hand there is pick up in industrial offtake of the white metal, there is also mining related issues being confronted which is supporting metal prices on the higher side.
Return from silver from March lows:
In a pandemic struck economy, gold which otherwise gains due to geopolitical and economic crisis also lost as investors freed up their position in yellow metal which dragged gold prices lower. Also, silver at that point in time hit a low of Rs. 39523 per kg, and now has scaled higher by 40% considering July 21, 2020's highs.
Also, as there is enough headroom for silver prices to zoom which hit a high of Rs. 75000 or $49-50 in 2011, the metal can be watched on from here and for tapping likely future gains one if with risk appetite and long term investment horizon can invest in silver in these possible ways:
1. Physical buying in silver:
One can buy silver in physical form i.e. the easiest mode and due to the lockdown led disruption and restriction movement, online sales platform is also made available.
2. Silver futures contract on the MCX:
You can open a commodities trading account and buy silver for the long term. Silver futures that are being traded need to have the underlying in physical metal. With a month validity period as well as a minimum and maximum lot size, investors can buy futures and options contract in metals. In the case of MCX silver future contracts, lot size is 30 kg in case of silver for silver mini 5 kg and silver micro 1 kg.
3. Global investments:
Under the liberalized remittance scheme or LRS, global investment in the commodity can be made via various platforms.
4. Silver-based structured products :
In times when there is anticipation of surge in silver prices, affluent individuals with know how on the product working have been known to take route in silver based structured products.
These products participate in the upside of a commodity to a limited extent but in return do avoid any costs of exchange trade.
But what one needs to note when making overseas investment in such assets is that any rupee appreciation against the dollar may result in losses at the time of redemption.
5. Overseas Silver ETFs:
iShares Silver Trust (SLV) with the underlying investment as silver is being suggested to be the best option for investment in silver if you maintain a foreign brokerage account. The ETF carries an expense ratio of 0.5%.
Notably but precious metal investment is not for the risk averse. It requires a high-risk appetite and a high degree of financial knowledge.
"I regard silver as a product for sophisticated investors only. By sophisticated I mean those who fully understand the risks of investing," said Bhavesh Damania, founder and chief care taker, Wealthcare Investments. "If an investor wants to invest in it, it shouldn't be more than 5-10% of the portfolio and with risk appetite and patience to wait till it delivers decent returns."
So, investors with money as well as risk appetite can also lap up other metals besides gold to reduce risk and make gains in a case if these metals catch up in the rally.