Silver ETF Alternatives in India

by Manshu on November 16, 2010

in Investments

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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.

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