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A Comprehensive Guide to Silver ETFs in India

For decades, silver has been often bought as jewelry or coins during festivals like Dhanteras. Since 2022, Silver Exchange-Traded Funds (ETFs) have emerged as a modern and cost-effective alternative to holding physical metal.

In this blog, we will break down and explore everything you need to know about the basics of Silver ETFs. 

What Are Silver ETFs?

A Silver ETF is a type of mutual fund scheme that tracks the domestic price of physical silver. When you invest in a Silver ETF, you aren't buying the metal to store it. Instead, you are buying units that represent high-purity physical silver (usually 99.9% purity) held in secure vaults by SEBI registered custodians in accordance with the regulatory requirements. These units are listed and traded on stock exchanges like the NSE and BSE, just like company stocks.

What are the benefits of investing in Silver ETFs?

Investing in Silver ETFs may offer several advantages over traditional methods of owning Silver:

  • Assured Purity: Every unit is backed by 99.9% pure silver, reducing the risk of buying impure metal from other avenues.
  • No Storage Hassles: You don’t need to worry about bank lockers, theft, or insurance. The silver is stored in vaults held by a registered custodian.
  • Liquidity: You can buy or sell your units instantly on the stock exchange during market hours at transparent, real-time prices.
  • Low Entry Cost: You can start by buying as little as one unit, making it much more affordable than buying a silver bar or brick.

Silver ETFs vs Other Silver Investment Options

Feature

Silver ETF

Physical Silver

Silver FoF

Storage

Digital (No hassle)

Physical (Hassle of storage)

Digital (No hassle)

Purity

99.9% 

Must be verified

99.9% 

Demat Account

Mandatory

Not required

Not required

SIP Convenience

Manual/Broker-dependent

N/A

Convenient (Auto-debit)

Transaction Cost

Low to Moderate (Expense ratio)

High (Making charges/GST)

Moderate Expense Ratio (Higher than ETF)

What are the Risks & Challenges of Silver ETF Investing?

While Silver ETFs are convenient, they are not without risks:

  • Market Volatility: Silver prices are historically more volatile than other precious metals. Large price swings may occur based on global industrial demand and economic cycles among other factors.
  • Tracking Error: Occasionally, the performance of the ETF may slightly deviate from the actual price of silver due to fund expenses, cash holdings or volatility.
  • Trading at a Premium/Discount: Sometimes, the market price of an ETF unit on the exchange may be slightly higher or lower than its actual NAV.
  • No "Touch and Feel": For those who value the cultural or emotional satisfaction of holding physical metal for gifting or rituals, digital units may feel less rewarding.

Conclusion

Silver ETFs offer a bridge between traditional commodities and modern financial investment. Whether you are looking for a tactical trade or a long-term investment, Silver ETFs provide a transparent and regulated way to gain exposure to silver.

Disclaimer - Please note that this article or document has been prepared on the basis of internal data/ publicly available information and other sources believed to be reliable. The information contained in this article or document is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party in any manner. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article or document.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Published on Feb 13th, 2026

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