Investing in silver electronically or through ETFs had not been possible in India till recently. InvestmentYogi presents a guide on how to invest in silver online in an efficient and transparent way.
Over the recent months, there has been a noticeable increase in the popularity of silver. Not only is it gaining against various currencies, but it also seems to be outperforming gold, it’s most favourite counterpart. Many experts feel that, silver could prove to be a better investment alternative than gold, as it requires lesser capital, and provides an equally good hedge against inflation and economic volatility.
So how do you invest in Silver?
Up to a couple of years back, the only way to invest in silver was to physically buy them from the store. With the opening up of newer trading mechanisms in the last few years, more ways of purchasing silver have emerged. E-Silver, an initiative of National Spot Exchange Limited (NSEL), now lets you invest in silver electronically.
So instead of just stocking up those silver bars and jewellery in your safe deposit locker, E-Silver could well serve your purpose. It could satisfy your traditional requirements as well as add value to your portfolio.
The E-Silver Product
Part of NSEL’s E-series, E-Silver lets you purchase physical silver of 99.9% purity electronically and hold them in demat form. You could buy and accumulate silver in small denominations of up to 100 grams, and even liquidate them into physical form if required. The physical silver involved in the trade is stored by NSEL in Exchange Designated Vaults.
Features of E-silver
-Assured safety of the metal at nil storage costs. NSEL recently waived the storage costs associated with E-Silver contracts, making it an attractive and cheaper investment option.
-Assured purity of 99.9%.
-Available in small denominations. E-silver could be traded in denominations as low as 100 grams each, making it affordable even to small retail investors.
-Option of taking physical delivery of the metal in the form of silver bar or coin, if required at any point of time. Delivery of physical silver could be in multiples of 500 grams, 1 Kg or 5 kg, at NSEL centers.
-Simple and seamless process of buying and selling. Trading could be done easily through any empanelled depositary participants. Some DP’s also offer trading facilities through telephone or online trading terminals.
For investing in the E-series, you would require a separate demat account with any one of the empanelled Depository Participants (DP) of the NSEL. The list of DPs could be found on the NSEL website
Trade Settlements of the E-Series is similar to that of equities, of T+2 days.
-All investments in E-series attract a custody charge, which includes vault and insurance charges, of 60 paise per month. Charges are applicable on the number of units held in the demat account on the last Saturday of every month. Suppose an investor buys and sells his units during the course of the month, and holds nil units on the last Saturday of the month, no custody charge is to be paid.
-During conversion of units to physical silver, unit holders would have to pay VAT/GST and other local taxes, as applicable in the place of delivery.
-For delivery of silver in the form of coins, the exchange would also levy making and packing charges.
E-Silver, a Silver Lining to Your Portfolio
When we look at the price of silver, ending 30-Sep-2010, the metal closed at Rs 33,350* per kg versus last year’s closing of Rs 26,040* on the same date. The price of the metal has appreciated by around 28%. Though considered more volatile than gold, the metal has the potential to appreciate more than gold, owing to its increasing industrial demand.
Of course given the current Bull Run, the risks associated with investment in any metal, looms over a silver investment too.
On the positive side, whether you are looking for a diversification in your portfolio or for marriage and ceremonial requirements, E-silver could well be a good option, without having to be bogged down by issues such as security. Its transparent and simple mechanism is a value for your money and portfolio.