Spotlight on Silver: Why Silver Investment is a Good Idea

Here’s a quick activity – look around your house carefully and make a list of 5 different things in your house made of silver.

Done? Great.

Now make a list of 5 things made of gold.
Not that easy, right?

It’s surprising how, despite being used so widely, silver has never enjoyed the attention and status that gold has. If we look closely, we will realize how many things we use in our day-to-day life are made of silver. From jewellery to dining sets to lamps and decorative boxes, silver has been a part of our households for years. In fact, one upon a time it was considered more precious than even gold in some cultures!

What's so special about silver?

So what makes silver one of the most sought-after metals? First and foremost, its beautiful white shine. Silver’s subdued, moonlight-like sheen makes it very attractive as a base metal for jewellery and kitchen silverware. It lends a sophisticated look that is not as overwhelming as gold.

Apart from that, this quiet, unassuming metal scores very highly in other features such as malleability and ductility, meaning it can be beaten into the thinnest sheets and most delicate wires. Talking of wires, silver also happens to have the honour of being the number one conductor of electricity among all metals. This double bonus of being a great conductor as well as its ability to be made into thin wires makes it ideal for use in many industrial and electrical applications.

And another feather in its cap is its reflectivity. Silver can reflect 95% of the visible light spectrum, thus making it irreplaceable in solar power generating systems and machinery.

As we all know, right now, it is technology which is driving the global market forces. Incessant innovations and upgrades in new and existing technologies – from Electric Vehicles to solar power generators to 5G systems – are continuously vying for the top position across the world. In such a scenario, the demand for this all-rounder silver is rising too.

Is silver a good long-term investment?

With so much going in its favour, it comes as no surprise that silver is one of the most widely used metals in the spheres of industry, science and technology. According to silverprice.org, silver price has increased 56% in the last five years and a whopping 678.5% in 20 years. This means, if you invested Rs 1 lakh in silver in December 2001, your silver portfolio would be worth Rs 7.78 lakh in December 2021. This increase is just the beginning. Silver has a bright future ahead in the digital green world.

Also read - All you need to know about Silver Mutual Fund

Favourite of the Market Favourites:

Silver is a commodity whose price is determined by the market forces of demand and supply. Up until now, silver was cheaper than gold because it was more widely available than gold. But its industrial application in the future growth trends of 5G, EV, and solar could act as a catalyst and drive demand.

India is at the cusp of each of these three growth trends. The 5G rollout is about to begin, the government is investing in “green initiatives” like photovoltaics and EVs, paving the way for all major players. The benefits of investing in silver is that it gives you exposure to all three trends. Of course, there will be volatility as demand and supply fluctuates, but the white metal is on track for growth in the long term.

True Potential:

Silver gave a glimpse of its growth potential in 2020 when its price surged at a faster rate than gold. According to the Sprott report, silver prices surged 47.89% in 2020, almost double the rate at which gold prices rose (25%). This growth was mainly driven by investor demand as silver is also considered a safe haven during an economic crisis when fiat currency starts losing value.

Although silver prices saw a correction in 2021, its demand has remained unabated. On the one hand it has storage value because of which it rises in a downturn, and on the other hand, it has industrial applications that help it remain strong during phases of economic growth. Currently, India is seeing high inflation and low interest rate, making investors explore such investment options that are relatively safer and consistently in demand.

Although silver prices saw a correction in 2021, its demand has remained unabated. On the one hand it has storage value because of which it rises in a downturn, and on the other hand, it has industrial applications that help it remain strong during phases of economic growth. Currently, India is seeing high inflation and low interest rate, making investors explore such investment options that are relatively safer and consistently in demand.

Silver is finally enjoying the glory and attention it deserves. Investing in it right now could be a good opportunity to make some returns while silver shines.

Aditya Birla Sun Life Mutual Fund has come up with Aditya Birla Sun Life Silver ETF and Aditya Birla Sun Life Silver ETF Fund of Fund, which is under the NFO period. It is a unique opportunity to invest in Silver digitally. For more information, please visit: bit.ly/33oVDZL

Sources:
https://silverprice.org/spot-silver.html
https://sprott.com/insights/silvers-clean-energy-future/

Past performance may or may not be sustained in the future.
The investors will bear the recurring expenses of the Fund of Fund (‘FoF’) scheme in addition to the expenses of the Underlying Schemes in which investments are made by the FoF scheme

For more information on the scheme, please refer to SID/KIM of the scheme.

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