The demand for silver, especially through Exchange Traded Fund, had spiked ahead of Dhanteras with the assets under management more than quadrupling to ₹12,331 crore last month against ₹2,845 crore in the same period last year.

The net inflows grew 24 per cent at ₹643 crore last month.

Ashwini Kumar, Senior Vice-President and Head-Market Data, ICRA Analytics, said the number of silver ETFs in market has grown to 12 against 8 in April 2023.

The market may see the launch of more silver ETFs in the coming months as its role in investor portfolio diversification, investment and management becomes more crucial, he said.

If domestic inflationary pressures and geopolitical instability continue to persist, then silver may continue to witness upbeat demand.

“Silver ETFs managed to garner attention of the investors in short span. It is being increasingly preferred over physical form as investing in physical silver is challenging due to storage related issues. Moreover, buying of physical silver may incur GST costs which unregistered dealers may have to pay out of pocket,” Ashwini Kumar said.

“Investing in silver ETFs is relatively easy compared to that of traditional methods of investment in physical silver and they have better liquidity,” he added.

Good returns

The average returns for a 1-, 6- and 12-months were in the range of 7.57 per cent, 20.25 per cent and 32.49 per cent, respectively. This is in contrast to an average return of 5.32 per cent, 1,029 per cent and 28.07 per cent generated by gold ETFs over 1-, 6- and 12-months duration, respectively.

“Silver prices are expected to remain attractive on expectation that the US Federal Reserve will continue to cut interest rates in the coming months boosting the prices. Besides, demand of silver is expected to remain upbeat due to its usage in electronics and green technologies,” he said.

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