As an investor, you might have noticed that gold steals the spotlight many times when the market feels uncertain. For generations, gold has been considered as the safe haven for investors. Now that gold prices are all-time high, many investors are considering an allocation in this metal to balance their portfolio.
However, one metal quietly sits under the radar – silver. Do you think including a silver ETF in your portfolio might give you a better edge? How can you balance your investments in precious metals at a time when gold prices are soaring?
That’s exactly what we have discussed in this blog.
Drivers and investor sentiment behind the gold rally
Let’s understand the factors driving the demand for gold.
- Hedge against inflation
While investors turn to equity for aggressive growth, gold gives you a hedge against inflation. Gold prices usually remain stable during geopolitical tensions and central bank policies. Historically, investors have found a safe resort in gold.
- Festive demand
The festive months around Diwali and Dhanteras usually witness a buying spree. It’s easy to understand why gold prices consistently keep growing.
- Safety net
Psychologically, investors perceive gold as a safety net. When volatility grips the market, gold prices typically remain stable.
- Easy to buy
With the convenience of ETFs, investing in gold becomes even simpler. Investors often look for the best gold ETF in India, as these assets replicate the exposure to physical gold. But it comes without the concerns of storage or purity.
Why should investors pay attention to Silver?
While you may consider gold as the safety net, the opportunity often lies in silver. Silver finds its utility in the industrial sector, too. Electronics products, solar panels, medical devices, and even green energy technologies fuel the demand for silver.
This industrial application is one of the reasons investors must consider a silver ETF. When market conditions look optimistic, silver tends to rally faster than gold. Like gold, silver prices also remain stable, but its dual functionality as an industrial metal gives it a unique growth potential.
Gold vs Silver: Comparison for investors
Investors must understand how gold and silver behave in different market conditions and strike a balance.
- Volatility
Prices of silver are prone to sharper swings compared to gold in volatile markets. This is because the market for silver is comparatively smaller, and it is also used for industrial purposes.
- Growth potential
Silver often outperforms gold during economic upswings due to its high industrial demand.
- Safety
Both gold and silver offer a hedge against inflation. Gold dominates during crises, while silver outperforms in favourable markets.
Why a metal mix matters in a diversified portfolio
Investors should prioritise diversification while allocating their assets. While relying solely on gold seems a safe option, it can cap potential gains during bullish markets.
That’s why you can include a silver ETF in your portfolio that delivers higher returns and reduces the risk of concentration.
Long-term investors can find a balance of growth and stability with both gold and silver ETFs. Most importantly, there’s no burden of storage, checking purity, or liquidity concerns.
Conclusion
Looking forward, gold will always be a part of resilient portfolios, particularly in India. Gold ETFs are already popular, but silver deserves attention, too. A silver ETF provides you with exposure to industrial growth and paves the way for potential returns.
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