Unlike gold, which is available in the form of exchange traded funds, you can buy silver only from a bank or a jeweller. Silver coins from banks are expensive as they include charges for the tamper-proof packing and an assay certificate.
A 50-gm silver coin of 24 carat purity from HDFC Bank costs Rs 3,220, but the same coin from a jeweller costs Rs 2,500 in Chennai (as of January 14). Jewellers levy casting charges (around Rs 1,750/kg) apart from a 1 per cent sales tax.
Buying silver in the form of jewellery or artefacts is, however, far more expensive than buying coins. These suffer a making charge of 10 per cent or more and a melting charge of 15 per cent upwards at the time of resale, which lowers effective returns.
You can buy silver in the commodity futures exchange too, but the contract sizes are large. The smallest contract in silver (silver micro) is traded in units of 1 kg and delivered in minimum lots of 30 kg.
The initial margin one would have to pay when taking a position is 5 per cent - Rs 2,200. This apart, you will pay brokerage, STT, stamp duty and exchange levy, working out to another Rs 200-250. If you don’t intend to take delivery, you can roll over the contract, but the mark-to-market margins can be significant.
There is no silver ETF in India. Buying silver in the electronic spot market is also ruled out with the National Spot Exchange shut. The only other option for investing in silver is to buy silver ETFs listed in the US market. For this you need to first open an account with a stock broker who offers a platform to invest in global stock markets.
However, remember that silver doesn’t offer the haven qualities of gold because of its industrial character.
Chirag Mehta, Fund Manager-Commodities of Quantum Mutual Fund, says “Silver isn’t a good investment option for the layman. Half of global silver demand originates from industrial uses. Thus, it has a tendency to move with equities and perform badly when things turn difficult. In terms of return characteristics, silver is half copper and half gold. It is a risky bet compared with gold.”
No comments:
Post a Comment