Silver prices at record high: What are the best ways to invest in silver? Why ETFs may be a good bet

NEW DELHI: The rally in silver is showing no signs of abating. The price has already crossed ₹1.19 lakh per kg. This surge is driven by increased global trade tensions, inflation fears, and a renewed interest in silver as a safe-haven asset. The demand for silver is also fueled by its increasing use in industrial applications like solar panels and electric vehicles. Some analysts say the price of the white metal can cross Rs 1.5 lakh per kg in the next 12 months.

Buying physical silver, whether as coins, bars, or jewellery, can be appealing due to its tangible nature, but it comes with several risks and challenges. For one, you have to pay making charges if buying jewellery, decorative items and artifacts. Making charges can be as high as 15-20% of the value of the metal.

The second hurdle is storage. Silver is bulkier than gold. For the same value, it takes up much more space than gold. An investment of Rs 1 lakh will buy only 11 gm of 22 carat gold, which can be put away in a tiny box. The same amount invested in silver will buy around 850 grams of the white metal. Storing that will take up a lot more space than an 11 gram gold trinket. If storing in a bank locker, you will have to go for a larger and costlier option.

The other problem with physical silver is tarnishing and degradation. Unlike gold, which does not lose its sheen come what may, silver reacts with sulfur in the air and tarnishes over time, losing its shine and requiring maintenance. To prevent tarnishing, it needs to be stored in an airtight environment.

Lastly, there is the problem of liquidity. Though jewellery stores are willing to buy your silver, the metal may vary in purity. If there is no hallmarking or certification, buyers will want to put it through quality and purity checks. Selling the metal will also require some time and effort.

In sharp contrast, investing in silver ETFs is easy, storage is convenient, the charges are very low and there is very high liquidity. You can buy silver ETFs if you have a stock trading account with a brokerage house and a demat account for storing the ETFs. You will have to pay an upfront 0.25-0.5% brokerage on the deal. The expense ratio of roughly 0.5% per year is deducted from the NAV itself.

Investors who don’t have stock trading and demat accounts can go for silver Funds of Funds from mutual fund houses. These funds invest in silver ETFs, so you will be paying an additional layer of charges that vary from 0.18% to 0.25% per year. But it saves you the trouble of opening and operating a trading account and the cost of a demat account.

Best Performing Silver Funds

Funds ranked on one-year returns. Data as on 15 July 2025. Source: Value Research


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