Your Guide to Investing in Silver ETFs in India

In 2025, the silver glittered the most with Silver ETFs even delivering gains over 100%, surprising, right? Last year, in November, the silver price for 1 kg of the metal was around ₹91000, while this year, the price has shot up to over ₹170000 per kg. 

This massive price rise has made many interested in investing in the silver ETFs, which is one of the best possible ways of investing in this metal, and if you are one such investor who is thinking of investing in silver, then you need to read this article. 

This article will cover the basics of silver ETFs, the process of investing in these ETFs, and a lot more that you might need to know before adding this metal to your investment portfolio. 

What are Silver ETFs?

If you want to buy silver for investment purposes, one of the best ways is to invest in silver ETFs, but what is a silver ETF? Let’s understand. 

Silver ETFs or Silver Exchange-Traded Funds can be described as an investment vehicle where the fund tracks the price of physical silver in the domestic market, and the fund is traded like shares of a company on the stock exchanges. These ETFs allow investors to invest in silver and gain exposure, but without buying physical silver. 

How do silver ETFs work?

To understand silver investing and silver ETFs better, let’s find out how these ETFs work. 

So, ETFs have an underlying, which in this case is silver. Now the fund pools money from different investors who want to invest in silver and then use the accumulated money to buy physical silver bars or silver coins of high purity and securely keep the physical silver in the vaults of custodian banks. 

The next step is to track the silver prices and determine the ETF’s units value. So, the ETF units’ value is determined by the market price of physical silver so that the ETFs can replicate the performance of the metal and offer similar returns to the investors. 

Investors can buy these silver ETFs and hold them for long-term investment goals, or trade them like shares during market hours. 

Features of Silver ETFs

• Purity: The ETFs hold the purest silver with at least 99.99% purity, which means you are investing in the purest form of the metal, even without buying it physically. 
• Security: As you are not buying the physical silver, there is no risk of theft, wear and tear, etc. Moreover, the physical silver held by the ETFs is stored in vaults of custodian banks as mentioned above, making them highly secure. 
• Accessibility: You can buy or sell silver ETFs anytime, from anywhere, and also invest according to your budget. 
• Highly liquid: Silver ETFs are traded on the stock exchanges and thus are highly liquid, which can be bought and sold easily. 
• Cost-efficient: Silver ETFs are a cost-efficient investment as there is no storage cost on silver, there is no making charge, or transaction charges. 
• Transparency: Finally, these ETFs are highly transparent, as you can always check the real-time value of the ETFs, which depend on the price of physical silver.     

Why You Should Invest in Silver ETFs?

Earlier, people used to buy silver as investments, but in physical format, which had different challenges, such as wear and tear of the metal can lead to cost depletion, high storage costs, low liquidity, risk of theft, and other such issues. 

On the other hand, choosing silver ETFs can help you invest in the metal without the above-mentioned challenges. As you aren’t buying it in the physical form, there is no risk of depreciation by wear and tear, similarly, no storage cost you need to incur, and no risk of theft. 

Silver ETFs can help you diversify your investment portfolio as well. This metal has a low correlation with the stock market. So, this investment can be used for diversifying your investment risk.

If you invest in silver, you can also hedge your investments against inflation, as historically seen precious metals like silver and gold often beat inflation in the long run. Moreover, now with the massive rally that silver has been witnessing, perhaps silver is the new gold in the investment arena. 

Read About : Key Differences Between ETFs and Mutual Funds

Key Factors to Consider for Buying Silver ETFs

Before you start with your silver investing, here are a few things you need to consider – 

• Silver is a volatile metal, often more volatile than gold, so you need to have a good risk appetite to invest in silver ETFs.  
• For investing in the silver ETFs, like any other ETFs, you need to pay some charges to the AMCs offering the ETFs. It can include the management fees, entry and exit ratios, etc. 
• One of the major factors you need to keep in mind is Tracking Error. It is the difference between the performance of Silver ETFs with the physical silver price in the market. While a nominal gap suggests the fund is performing well and at par with the physical silver but a huge gap can be a concern. 
• Finally, before investing in silver using ETFs, you must check whether it aligns with your investment goals or not. Also, you need to figure out whether you are going for silver investing for long-term or short-term, and for what reasons you are adding it to the portfolio. 

How to Buy/Invest in Silver ETFs?

• Log in to the Shoonya app.
• On the dashboard, go to Watchlist.
• Tap the Search icon.
• Enter the name of the silver ETF you wish to add to your watchlist.
• Tap the + icon — the ETF will then appear in your watchlist.
• Once it’s in your watchlist, you can proceed to place your order.

Taxation on Silver ETFs

Understanding the taxation on Silver ETFs is another crucial thing for investors. 

• For investment tenure up to 1 year: Profits are treated as short-term capital gains, and taxes are levied as per your income tax slab, along with cess and surcharge (if any) 
• For investment tenure over 1 year: Profits are treated as long-term capital gains, and taxes are levied at 12.5%, along with cess and surcharge (if any) 

Conclusion 

If one question that many investors are asking now then it would be “Is silver the new gold?” And the rationale behind this is the massive rally that silver rates have portrayed in recent times. If you want to invest in silver ETFs, then doing it now can be a good decision, provided it aligns with your investment goals and investment portfolio. 

Silver ETFs | FAQs

Source: https://silverprice.org/

Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.