In recent years, Indian investors have shown a growing affinity for silver exchange-traded funds (ETFs), reflecting an increasing interest in precious metals. Since their introduction by the Securities and Exchange Board of India (SEBI) in November 2021, silver ETFs have gained significant traction, with assets under management (AUM) surpassing ₹13,500 crore by January 2025, according to data from Zerodha Fund House. Over the past three years, twelve silver ETFs have entered the market, amassing more than 600,000 folios.
Strong Demand for Silver ETFs
Vaibhav Jalan, Chief Business Officer at Zerodha Fund House, noted that the rising transaction volumes in silver ETFs signal a clear uptick in investor engagement. He stated, “The growing interest showcases how these ETFs provide an effective alternative to holding physical silver. They eliminate concerns related to storage, security, and insurance, while still allowing investors to benefit from silver’s price fluctuations.”
Silver’s Multifaceted Appeal
The allure of silver in India extends beyond mere investment; it holds deep cultural relevance, especially during weddings and festivals. Additionally, silver’s industrial applications make it a vital commodity in various sectors, including:
- Solar energy
- Manufacturing
- Jewelry making
Since 2021, the demand for silver has consistently outstripped supply, prompting a surge in prices. According to The Silver Institute, industrial demand for silver has soared by over 55%, driven by its diverse uses in industries such as automotive, technology, pharmaceuticals, and renewable energy.
Future Price Projections
Market analysts are optimistic about the trajectory of silver prices in 2025. Currently, silver futures are trading around ₹100,450 per kg, with experts predicting a potential rise to ₹1,17,000 within the next year. Apurva Sheth, Head of Market Perspectives & Research at SAMCO Securities, pointed out that silver has historically traded within defined ranges since 2017, with previous upward breakouts resulting in sharp price increases. Given the historical tendency for silver to surge by as much as 50% from previous highs, Sheth suggests that a target of ₹1.17 lakh could be achievable.
The Role of Silver in Investment Portfolios
Vishal Jain, CEO of Zerodha Fund House, emphasized that silver holds significant potential for both investment diversification and industrial applications. He remarked, “Silver ETFs are an excellent option for diversifying one’s portfolio and leveraging the unique characteristics of the metal.”
Conclusion
As the popularity of silver ETFs continues to rise, investors are increasingly recognizing the opportunities they present. With silver’s cultural significance and industrial versatility, combined with favorable market projections, now may be an opportune moment for investors to consider adding silver ETFs to their portfolios.
For further insights on silver investments and market trends, explore resources on financial planning and precious metal investments.
