Investing in jewellery and utensils still considered best option
THE white metal saw a big rally over the past one week with silver prices breaching the Rs 50 per gm mark in the domestic market and settling at that level. On Tuesday, the white metel scaled Rs 51,150 per kg mark. For those cursing themselves for not having invested in the white metal so far, there is still hope.
Financial Chronicle brings you a detailed study on how, where and why to invest in silver.
Size of metals in your portfolio: Precious metals like gold and silver should ideally form 5 per cent to 10 per cent of an individual's investment portfolio, according to financial experts. Those who do not have silver as part of their portfolio as yet, could allocate about 5 per cent of their investment, that too in a staggered manner, in silver, experts say.
The reason is that though the prices of silver and gold have been witnessing an increase over the past few weeks, the quantum of increase has not been what it was in the past two years
To keep it short or long: Silver, like gold too, should be viewed as a long-term investment avenue. Silver has been witnessing an intra-day volatility of up to 2 per cent of late. Hence investing in silver in the short term may work for traders. But for investors, investing in silver in the long term would work the best.
E-silver: For those wanting to benefit from the silver rally, but do not have any use for silver in its physical form, e-silver is a good option. Like e-gold, e-silver is a form in buying silver in the electronic format. Based on the investment appetite, one can buy silver units or grams and later encash it for physical silver or sell it for cash in the secondary market, just like stocks.
The price of the units would be directly linked to the prices of silver in international market. The best way to invest in e-silver would be a systematic investment of a certain amount of money every month, experts say.
Since Sebi has not yet sanctioned the trading of silver exchange traded funds (ETFs) in India, e-silver is the next best option for those wanting to invest in non-physical form of silver.
But the disadvantage here is that trading or buying e-silver is possible only through National Spot Exchange (NSEL). Only few of the big broking houses like Religare Securities, IL&FS Securities, Karvy Stock Broking and Sharekhan, are associated with NSEL for trading in e-silver and egold. And one has to have a demat account to buy and trade in e-silver.
Silver Bars: At present HDFC Bank only sells silver bars in India. The advantage here is that one can invest now at current prices and exchange it few years later for jewels or utensils, when the prices would have gone up.
But there is VAT payable for the purchase of silver bars, putting it at a disadvantage.
Also there is the cost of storing and maintaining the silver bars and most Indian jewellers are notorious for buying back silver at a much lower price than the price it is being sold at.
Ornamental silver: The good old, grandma's days' method of investing in silver jewellery and utensils still remains the best, according to most financial experts. Being Indians silver plays a major part in every landmark in an individual's life and this would get one, the best return on investment, they point out.
