Investing in Silver – Not a hassle anymore!!
Most of us have in some way or another invested in silver. We have silver coins or bars, which we have purchased many years ago and now keep in bank deposits. Silver, like gold witnesses a rising price over the long run. However, it being sold in its physical form has made the process very tedious and expensive to purchase and maintain.
Wouldn't it be much simpler if we could purchase units of silver and maintain them in an electronic format rather than have to purchase physical silver?
National Spot Exchange Limited (NSEL) has put an end to your woes, by launching a new product for the ease of investors in the commodity market, E- silver. Like the equity market, one can now purchase units of silver and hold them in the electronic format.
E- silver, is a new incarnation of silver which can be purchased in smaller denominations and held in the demat format. It allows for ease of handling and flexibility in trade timings. Since, it does not involve holding physical silver, it also saves on cost for storing and maintaining of this silver, thereby making it more convenient and attractive for the investor to invest.
E-silver can be purchased on the pan-India electronic platform set-up by National Spot Exchange, by opening a demat account with a depository, similar to trading in equity. An investor can buy, hold and liquidate silver and ask for delivery in cash or physical delivery, as he wishes. In case an individual wishes to collect the silver in physical form, currently it is available only in 3 NSEL authorized centers at Mumbai, Delhi and Ahmedabad. Collecting it in physical form has only nominal charges to it. Trades carried out under this format are settled on a T+2 basis, that is within 2 working days after the order has been placed. The trading period is from Monday to Friday between 10:00 am to 11:30 pm and hence the investors can trade at their own convenience.
Key features of E-silver:
E-silver is held in the demat form, whereas the physical silver is maintained in a warehouse on behalf of the investor.
It can be liquidated easily and delivery can be taken in cash or the physical form, as the investor wishes.
An investor can now invest in minimum 100gm of silver as opposed to buy huge amounts of physical silver.
Silver of 999 purity is guaranteed.
A transparent and uniform pricing system is followed for trading all across India.
It can be easily and safely traded online.
It has nil storage and holding cost.
Convenient trading times are available for the investors to trade at their own convenience.
There are a few drawbacks too:
Unlike Gold ETF’s there is no tax advantage to trading in E-silver. Long term Capital gain still applies only after 3 years of holding.
The market is still new. This means that volumes are not at levels where liquidity is at highest level.
Investments in the commodity market is now picking up in India, owing to the introduction of the electronic exchanges. They provide an easy and cost efficient way to investors to diversify their portfolio and gain from the rising prices of these commodities. You too can now invest in E-silver to gain exposure to the commodity market and benefit from this new development.
We at Fpguru.com do however suggest you to keep your financial goals in mind before investing in any asset class. Even if you plan to invest in Gold or Silver, do not keep more than 10% of your total investment portfolio in them. Also as with any investment, holding it for a longer time ensure success rather than trading in them!
By Shalmali Kulkarni.
The writer is working as a para-planner with Fpguru.com
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