Silver Shines Brighter: Rising Demand Among Indian Investors

Silver Gains Ground as Investors’ Top Choice

Gold has traditionally dominated the jewelry and investment market in India. However, soaring gold prices have shifted investor interest towards silver, both in physical form and through exchange-traded funds (ETFs). Recent reports reveal a remarkable surge in silver purchases and investment trends that underscore its growing appeal.

Silver Sales See Unprecedented Growth

Silver has delivered a stellar 20.25% return in the past six months, nearly double the 10.29% return from gold over the same period. With Dhanteras marking an auspicious time for investments, silver sales, both in bullion and jewelry, have surged. Silver ETFs have also gained significant traction, reflecting changing investor preferences.

Silver ETFs: A Rising Star in Investments

Launched in 2022, silver ETFs have witnessed exponential growth. A report by ICRA highlights:

• Number of Folios: Increased by 215%, from 1.42 lakh in October 2023 to 4.47 lakh in October 2024.
• Net Inflows: Grew by 24%, reaching ₹643.10 crore in October 2024, compared to ₹518.02 crore in October 2023.
• Assets Under Management (AUM): Quadrupled from ₹2,844.76 crore to ₹12,331 crore in one year.

In comparison to gold ETFs, silver ETFs have delivered higher average returns over one month (7.57% vs. 5.32%), three months (16.02% vs. 14.29%), six months (20.25% vs. 10.29%), and one year (32.49% vs. 28.07%).

Reasons Behind Silver’s Rising Popularity

1. Inflation Hedge: Domestic inflationary pressures have encouraged investors to diversify their portfolios with silver.
2. Geopolitical Instability: Heightened global uncertainties have bolstered demand for precious metals.
3. Higher Returns: Silver has outperformed gold in recent months, making it an attractive alternative.
4. Expanding ETF Market: The number of silver ETFs increased from 8 in April 2023 to 12 by August 2024, with more launches expected soon.

Future Outlook

Experts predict that silver prices could rise further if the US Federal Reserve lowers interest rates in the coming months. As silver solidifies its position as a vital component in investment portfolios, its importance in both hedging strategies and diversification continues to grow.

Silver ETFs, with their rapid growth and strong returns, are set to remain a focal point in India’s investment landscape.