Silver ETF Alternatives in India

by Manshu on November 16, 2010

in Investments

Liquid lightphoto © 2006 Melissa Wiese | more info (via: Wylio)

There are several gold ETFs in India, but no silver ETFs at all, and this makes it difficult for investors to take positions in silver (if they are so inclined), however there are a few other ways of getting exposure to silver, and I’ll talk about four of them here.

1. Milestone Bullion Series 1: I’ve already written about this option about a month ago, when reader Prasanna sent me details about it. This is a structured product, and the minimum investment needed to get into this product is Rs. 5 lakhs, so this is clearly not for everyone.

The way it works is that they take the money and invest in a portfolio with the following assets:

  1. Silver: Up to 40%
  2. Gold forwards / Gold deposit schemes: up to 40%
  3. Gold linked structure: up to 30%

The fee charged is as follows:

  • One time set up fee of 2% or 2.5% in case of investment less than 10 lacs.
  • Annual Management fee of 1.5% of the committed amount.

2. Commodity Futures: You can trade in commodity futures in India, and silver is one of the commodities that get traded, so you could potentially take a position in silver by trading on its futures. You can enable commodity trading by a special request to your broker, and thereafter trade in all the commodities available in exchanges like MCX and NCDEX, which include silver futures as well.

3. National Spot Exchange Limited (NSEL): NSEL is a relatively new player in the market, and allows you to trade in e-Gold and e-Silver, and this is another way of getting exposure to silver. You can open your account with one of their Depository Participants, and there’s also an option to take physical delivery if you’re so inclined. The futures unit of silver is 100 grams of silver, and you can take delivery in 100 grams, 1 Kg, 5 kg or a combination. ET reports that NSEL is Shariah Compliant as well.

4. Buy US silver ETFs from your trading account: Reader Venkat left a comment a few days ago about buying US silver ETFs by enabling overseas trading through your brokerage. You can ask your broker to enable overseas trading to you, and once enabled – you can buy and sell selected securities that trade in the US from your trading account. Venkat sent a brief list of silver securities also, and I see that there are quite a few silver options in there including silver futures, silver mining companies, and silver ETFs as well, so this option is something that you can also consider if you are interested in investing in silver.

As I said earlier, I have not been interested in buying gold or silver, so I don’t have first hand experience with any of these options listed above, but they are options for people interested in buying silver or getting exposure to silver in India, and if you’re interested you can pursue them further.

If you have any first hand experience or any other insights to share on this, please leave a comment.

{ 8 comments… read them below or add one }

Mayank November 16, 2010 at 5:10 am

Manshu, another great topic. Silver surely seems to have more potential out of the two precious metals. However one also neeed to take note that silver is definitely more volatile and specially when one is dealing in futures, one really needs to make a calculated entry else one can be simply wiped out. This i am saying by first hand experience 🙁

with QE1,2,3… coming in, real assets will definitely gain including precious metals. Also i feel silver has more potential to grow than gold in the long run, hence i shall surely be considering options 3 and 4.
Cheers!
Mayank

Reply

Manshu November 16, 2010 at 7:31 am

Thanks for sharing Mayank.

Futures and options are definitely a bit more dangerous than physical gold or silver, especially if someone is going short a future or some whacky thing like that; I’m really interested in hearing in what exactly you did and what happened? I’m sure there are lessons for us to learn from your experience.

Reply

Nataraj December 13, 2010 at 4:22 am

I need you to comment on Gold/ Silver ETFs and buying Gold/Silver thru Commodity exchange account…which is safer and economical…….

Reply

Manshu December 13, 2010 at 7:31 am

I don’t have any experience of buying through the commodity exchange account, so I can’t do a reasonable comparison. Sorry!

Reply

Chaya January 17, 2011 at 2:18 am

Silver will surely going to rock in a decade or so, but can anyone comment of NSEL option?

Reply

Manshu January 18, 2011 at 2:26 am

Chaya,

Here is a post that details out the NSEL option:

http://www.onemint.com/2011/01/13/e-gold-and-e-silver-from-nsel/

Reply

Tenzin April 19, 2011 at 11:12 am

Silver will hit $54/troy ounce, its all time high barrier. It is going to follow $1500/troy ounce all time high for Gold reached in 1980 (inflation adjusted) and now in 2011.

Reply

Vijay March 1, 2012 at 3:10 pm

Checked with my broker Geojit Comtrade – it is not possible to take physical delivery of eSilver. Only eGold has that option.

Reply

Leave a Comment

Previous post:

Next post: