Is it a good idea to invest in silver ETFs?

What's your opinion about the newly launched silver ETFs? Is it a good idea to invest in them?
- Sunil Badami

The silver fund is a new investment vehicle in the Indian market. So far, the only commodity Indian investors could invest in via the mutual funds' route was gold ETFs. These silver funds have made it easy for investors to take exposure to this metal. But most investors can do without it as I don't see a strong investment case here.

Having said that, there could be an investment case for some people who understand this commodity well. Commodity prices, including gold and silver, are cyclical. So effectively, by investing in silver funds, you bet on the cycle, which means one tries to buy when it is low and exit at the high or close to high. But finding the perfect low and the perfect high is impossible. So if you have any kind of special inclination to do this or the ability to time the cycle, then go ahead; otherwise, don't. Most investors can comfortably skip these ETFs. Just because there's a novelty factor and it has been made available to invest doesn't mean you have to invest in them necessarily.

This article was originally published on January 31, 2022.