Investors are closely evaluating gold and silver ETFs as volatility rises in precious metal markets. Here’s a detailed look at expert insights, fund performance, and market trends.
Siddharth Srivastava, ETF Product Head at Mirae Asset MF, told investors to carefully weigh risk and reward while selecting between gold and silver exchange-traded funds (ETFs) during Zee Business’ Budget Samvad show. He stated that he personally likes gold over silver.
Expert View on Gold vs Silver ETFs
Speaking about the future of precious metal exchange-traded funds (ETFs), Srivastava stated that demand for silver has been low for the past four to five years due to photovoltaic cells and electric vehicle applications. But according to him, there has not been any unexpected new industrial use to support the recent steep price increase.
For the past four to five years, silver has been in deficit. EV applications and photovoltaic cells have been around for a long time. “No unexpected new industrial application has surfaced,” he stated.
Silver Rally Driven by Speculation?
He pointed out that fundamentals did not fully justify the current increase in silver prices. “The deficit alone did not cause silver to rise from $30 to $120. The final parabolic surge was mostly speculative. Returns were the goal of investors. The rally did not seem justifiable at one time, according to Srivastava.
According to him, gold looks comparatively more stable at current prices when considering risk and reward. From a risk-reward perspective, I would choose gold over silver if I had to choose between the two now. I would wait a little while longer to observe a distinct trend in silver,” he said.
🏆 Gold ETFs Preferred by Experts
- Expert Choice: Gold over Silver (Risk-Reward)
- Stability: Gold comparatively less volatile
- Investor Strategy: Wait for silver trend clarity
- One-Year Returns: Gold ETFs ~80%
- Inflows: Rs 24,040 crore in January
Short-Term Outlook for Silver
Before making a decision, Srivastava stated that he would keep an eye on silver prices for the next three to four weeks. “Over the course of the upcoming month, I would like to watch where silver trends. I see a potential $10–$15 drop from here,” he stated.
Silver is a lightly traded asset that is prone to extreme volatility, he warned. Due to its low trading volume, we frequently witness 20–30% moves that happen extremely quickly. It is currently trading downward. He said, “Corrections can be sharp.”
Timing Risks for Domestic Investors
Additionally, he emphasized the timing risks for domestic investors. It is not always simple to sell equities right away because a lot of the correction occurs when Indian markets are closed. “Traders must realize that corrections might be really abrupt,” he stated.
He made reference to the recent surge in local silver prices, saying, “On a weekday, silver reached about Rs 4.20 lakh per kilogram. Many physical holders missed their chance to sell in a timely manner. Regarding the potential downside, he said that a significant drop in silver prices may be as much as 20%.
📉 Silver ETF Volatility Snapshot
- Recent Decline: 6–7% fall in major Silver ETFs
- Volatility: 20–30% sharp moves possible
- One-Year Gains: 160%+
- January Inflows: Rs 9,463 crore
- Risk: Corrections can be abrupt
Performance of Gold and Silver ETFs
Throughout the session, market data revealed erratic activity in both index-linked ETFs and commodities. Despite generating robust one-year gains of more than 160 percent, silver exchange-traded funds (ETFs) including Nippon India Silver ETF, HDFC Silver ETF, ICICI Prudential Silver ETF, and SBI Silver ETF saw declines of roughly 6–7%. Additionally, the Tata Silver Exchange Traded Fund experienced a decline of over 6%.
In contrast, gold ETFs were quite stable. While retaining one-year gains of about 80%, Nippon India ETF Gold BeES, Tata Gold Exchange Traded Fund, and ICICI Prudential Gold ETF had a 1-2 percent decrease during the session.
Investor Flows into Precious Metal ETFs
Investor flows into precious metal exchange-traded funds (ETFs) remained robust despite the recent drop in the price of gold and silver. Gold ETFs saw net inflows of Rs 24,040 crore in January, more than doubling from Rs 11,647 crore in December, according to figures published by the Association of Mutual Funds in India.
stock mutual funds attracted contributions of Rs 24,028.6 crore during the month, although for the first time, inflows into gold ETFs slightly outpaced those into stock mutual funds.
Silver ETFs had robust inflows as well. In January, they reported net inflows of Rs 9,463 crore. The total assets managed by silver exchange-traded funds (ETFs) were around Rs 1.25 lakh crore.
Futures Market Update
At Rs 2,41,198.00, silver 5 March futures were up Rs 4,763.00, or 2.01%, from the closing price of Rs 2,36,435.00. The intraday low was Rs 2,39,602.00, and the high was Rs 2,43,699.00. The contract started at Rs 2,39,626.00. It ranges from Rs 1,09,741.00 to Rs 4,20,048.00 during a 52-week period.
At Rs 1,53,749.00, gold futures were up Rs 913.00, or 0.60 percent, from the previous closing of Rs 1,52,836.00 on April 2. Throughout the day, the contract fluctuated between a low of Rs 1,53,368.00 and a high of Rs 1,54,837.00, having opened at Rs 1,53,750.00. It ranges from Rs 1,01,107.00 to Rs 1,93,096.00 during a 52-week period.
Frequently Asked Questions (FAQs)
1. Which is better right now – Gold ETF or Silver ETF?
According to expert opinion, gold currently offers a better risk-reward balance compared to silver.
2. Why is silver considered more volatile?
Silver is lightly traded and prone to sharp 20–30% corrections due to lower liquidity.
3. Are gold ETFs seeing strong inflows?
Yes, gold ETFs recorded net inflows of Rs 24,040 crore in January.
4. What is the risk in silver ETFs?
Silver ETFs can witness sharp corrections of up to 20% or more during volatile phases.
5. Should investors wait before investing in silver ETFs?
Experts suggest observing price trends for a few weeks before making fresh allocations.
Disclaimer: This article is for informational purposes only and should not be considered financial or investment advice. Investors should consult certified financial advisors before making investment decisions.
