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In an interview, Pratik Tibrewal, Fund Manager- Commodities, Axis Mutual Fund talks about prospects of silver, benefits of holding it through ETFs and FOFs and risk associated with it. Let’s look at some key highlights from the video.
Prospects of silver
Not just in jewelry, silver has a host of industrial uses like in computers and mobile phones, mirrors and other electronics. Also, EV vehicles have increased usage of silver in their engine. Silver is also rich in anti-bacterial properties and hence, it is used in the medical industry very extensively. In addition, silver has high thermal conductivity and reflective strength, which makes it ideal for solar panels.
Benefits of holding silver in electronic form
Investors can make fractional investment in silver in electronic form i.e. if the price of silver is Rs 50,000 kg, they can buy one unit at a cost of Rs 50. Also, there is no risk of storage and theft. Further, there is no stress about purity.
Another key benefit of holding silver in electronic form is that it is exempted from wealth tax.
Silver ETFs and FOFs
Investors require demat account to invest in silver ETF. However, investors can buy silver ETFs without demat account in FoF structure.
Both the funds are eventually holding silver as a commodity on your behalf. So, it doesn’t make a lot of difference in terms of the return. And the underlying is going to be priced at the London Bullion Market Association rate, which is famously known as the LBM spot.
Risk associated with silver ETFs
There is no risk with the silver ETF other than price volatility. Remember, price volatility affects all asset classes.
Since we hold the silver ETF in electronic form, there is no risk of fire, theft and purity.
You can watch the entire video by clicking here.
