Investing in silver MFs and ETFs at falling rates

Investing in silver MFs and ETFs

Silver is a precious metal that has an ornamental value and gifting value and is also used for religious purposes. People also buy silver as a form of investment. The mode includes bullion, commodity trading, digital assets, Exchange Traded Funds (ETFs) and even mutual funds.

Related - Find out how precious silver is as a metal.

When held as an investment, the movement of silver prices is extremely important. Only when the prices move up can you earn returns from your investments. That is why investors often look for price hikes before selling silver or silver-backed investments. This helps them book the maximum possible return on investment.

In recent times, silver prices have been falling. In fact, recently, silver prices touched a 2-year low. While this is a good time to buy the white metal at a reduced rate, investors are confused. Given the falling prices, they are unsure if it is wise to invest in silver ETFs or mutual funds.

Is this the right time?

Let’s analyse.

Are the falling rates permanent?

Falling silver prices are a concern if the fall is of a permanent nature. However, this is not usually the case over the long-term horizon with precious metals like gold and silver.

Currently, silver prices are falling because of the sudden rise in the Dollar index. The Dollar index has hit a 20-year high level of 110.78 when it normally stays in the 90s. The rise can be attributed to the Federal rate hikes that the US Government has been making over the last few quarters.

Once the Dollar index eases up, silver prices would begin to climb. Meanwhile, you can benefit from the reduced prices by investing in silver at discounted rates.

How to invest in silver?

While silver bullion is the traditional mode of investment, the digital mode is better.

Digitized silver assets, like digital silver, ETFs or mutual funds, are better investment choices because –

They are easy to invest in.

You can invest in small denominations. Thus, if you have limited savings, digital modes of investment would be better suited for you.

No making cost is involved. As such, digital silver is a low-cost investment alternative.

You can easily track silver price movement, even during the busiest market hours.

Digital silver is very liquid, allowing you to raise funds instantly, whenever needed.

Benefits of investing in silver ETFs or mutual funds

Silver is a widely used metal. Besides ownership from an ornamental or traditional point of view, the benefits of investing in silver are as follows –

You can diversify your portfolio as silver is a different asset class not correlated with equity or debt markets.

Silver has a low correlation with equity, so its prices are not considerably affected if the equity market turns volatile or bearish. Silver retains its price. In fact, the prices might also shoot up as investors might divert their investments from the volatile equity market and channel them into silver.

Silver is extensively used in industries. It is, thus, recognized in the global commodity markets as well and is a liquid investment avenue.

Silver finds usage in the new-age green technology too. This boosts silver demand, also pushing up the prices.

So, even though silver prices are falling, investing in silver is beneficial. You can choose the ETF or mutual fund route for an easier, more convenient, cost-effective investment. In fact, at reduced prices, you have the potential to earn attractive returns when the prices recover. Here's a quick guide about investing in commodities.

Should you invest in silver ETFs? Find out with this video

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.