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Silver ETFs in India rose 125% in AUM by May 2024, compared to gold’s 19.4%. Experts suggest diversifying with both metals
Silver ETFs in India rose 125% in AUM by May 2024.
For decades, gold has reigned supreme in the precious metal investment landscape. But a quiet shift is underway. Silver, mostly associated with traditional ornaments, is now emerging as a key player in strategic and thematic portfolios, powered by industrial demand and the clean energy transition.
Experts say this transformation is not a passing trend but a long-term structural shift. “Silver’s uniqueness lies in its dual identity; it’s both a precious metal and a critical industrial commodity,” explained Shruti Jain, Chief Strategy Officer at Arihant Capital Market. “Its role in the production of solar panels, electric vehicles, and electronics is making it indispensable,” she added.
A 125% Jump In Silver ETF Assets
According to the Association of Mutual Funds in India (AMFI), silver exchange-traded funds (ETFs) in the country saw their assets under management (AUM) soar by 125% as of May 2024. In contrast, gold ETFs grew by a relatively modest 19.4% during the same period.
This meteoric rise in silver ETF investments points to a shift in mindset. Investors are increasingly treating silver as a tactical and thematic tool, something that ties not just to commodity markets but also to long-term trends like decarbonisation and industrial innovation.
Silver also offers another major advantage – low correlation with the equity market. “Silver ETFs are becoming popular among those looking to cushion volatility in their portfolios,” said Jain, adding, “It’s not just about returns; it’s about strategic balance.”
However, silver isn’t without its risks. Unlike gold, it is more prone to price swings and isn’t considered a traditional ‘safe haven’. But that volatility may actually appeal to younger or more aggressive investors who are seeking higher returns, especially those aligned with green and climate-conscious investing.
The advent of silver ETFs has also democratised access. Where earlier one had to buy coins or bars – worrying about storage and purity – now silver can be added to one’s portfolio at the click of a button. The ease, transparency, and lower entry barriers have led to a broader investor base.
So, where should an investor place their bet – on the time-tested stability of gold or the growth potential of silver?
“Gold continues to be the go-to asset for capital preservation and liquidity,” Jain said, “But silver is fast becoming a growth asset.” Ideally, both should co-exist in a portfolio. Think of gold as your seatbelt, and silver as the accelerator, she further explained.
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