The rising prices of silver have had an impact on silver ETFs. Assets under management (AUM) of silver ETFs have reached a record high. Experts say that investors do not want to miss the opportunity of the ongoing rise in silver. Investing in silver ETFs is easy. One can invest in silver ETFs or sell units of silver ETFs through stock exchanges.
NAV of ETF increased despite softening of silver prices on October 9
Apoorva Seth, Head (Market Perspectives and Research), SAMCO Securities, said that the most traded SBI Silver ETF, HDFC Silver ETF And Axis Silver ETF There was a rise of 9-13 percent in the last trading session. He said, “Investors’ interest in silver ETFs is so high that after the fall in silver, there is a rise in the NAV of the ETF. On October 9, December futures of silver on MCX fell by 0.6 per cent. Despite this, there was a jump in the NAV of silver ETFs.”
Rising prices due to increased interest among investors in silver
He said that the reason for the rise in NAV of silver ETFs is not the fundamentals of silver but the interest of investors in investment. On October 13, a tremendous rise was seen in the December futures of silver on MCX. With 1:24 left it was Rs 1,52629 per kg with a jump of Rs 6163 i.e. 4.21 per cent. Due to investors’ interest in investing in silver ETFs, fund managers are buying physical silver. This is also affecting the prices of silver.
Silver is also used for manufacturing in many industries.
Silver is different from gold in the sense that its value does not depend solely on the demand for it for investment. It is used for manufacturing in many industries. Industrial demand is more than its supply. Due to this, there is a continuous increase in its prices. Silver is used in industries including electronics products, solar panels. Due to increase in production in these sectors, demand for silver is also increasing.
Premium increased 10 times compared to the beginning of September
Kotak Mutual Fund has said in its report that the premium of silver ETF was around 0.5 percent in the beginning of September, which increased to 5.7 percent on October 9. In the current market conditions, the buying premium is around 10 percent and the selling premium is around 3 percent. Kotak Mutual Fund Director Nilesh Shah, while talking to CNBC-TV18, explained the reason for this premium. He said that to determine the price of silver in India, its global prices are first taken and then it is converted into rupees.
Silver is mostly imported on which import duty is levied.
This can be understood with an example. Suppose the price of silver in the global market is $50 per unit. One dollar is equal to 90 rupees. This means that the price of one unit of silver will be Rs 4,500. After import duty and GST, its price reaches around Rs 5,000 per unit. But, due to shortage of silver both in India and abroad, the spot price of physical silver in India is around Rs 5,500.
Investors are paying 10 percent premium for silver ETF
Shah said that silver prices being at a premium means that when an investor invests in a silver ETF or silver fund of funds, he pays a premium of about 10 percent on the imported prices of silver. This premium seems high. Experts believe that the reduction in silver supply in India will continue till October. For this reason, Kotak Mutual Fund has banned lump sum/switch-in subscriptions to Kotak Silver ETF Fund of Funds.