Silver exchange-traded products show rapid rise
Holdings in silver exchange-traded products in India have recorded an annualised growth rate of 200% CAGR since 2022. That steep pace signals a fast-growing appetite for silver exposure through the stock exchange, rather than traditional routes like physical bars or jewellery.
Why investors are moving into silver ETFs
- Easy access: ETFs make it simple for retail investors to buy and sell silver in small quantities using their existing brokerage accounts.
- Inflation and macro hedging: Some investors view silver as a hedge against inflation and currency weakness, adding it to a diversified portfolio.
- Lower transaction frictions: Compared with buying, storing and insuring physical silver, an ETF can be more convenient and cost-effective.
- Rising awareness: Increased media coverage and product availability have brought silver ETFs into mainstream investing conversations.
What this growth means for the market
Rapid accumulation of assets in silver ETFs can change market dynamics. Expect improved liquidity and tighter bid-ask spreads for ETF units, which benefits traders and long-term investors alike. Product providers may introduce more varieties or related instruments as demand grows. At the same time, sharp inflows can increase sensitivity of ETF prices to global silver moves.
Risks investors should keep in mind
- Price volatility: Silver is historically more volatile than many other commodities and can swing significantly on macro news.
- Tracking differences: ETFs may not perfectly mirror spot silver prices due to fees, storage costs and operational factors.
- Counterparty and regulatory risks: As with any financial product, structures and rules can change, affecting returns.
- Tax and cost considerations: Expense ratios and tax treatments differ from physical holdings and should be checked before investing.
How to approach silver ETFs
- Decide the role silver plays in your portfolio — hedge, speculative play or diversification tool.
- Compare expense ratios, liquidity and tracking records before choosing a product.
- Consider position sizing and use silver ETFs as part of a balanced strategy rather than a concentrated bet.
- Seek professional advice if you’re unsure about tax implications or product mechanics.
The 200% CAGR since 2022 highlights growing investor interest, but the usual cautions about commodity investing still apply: do your homework, understand the risks, and align silver exposure with your financial goals.