Posted on 09 July 2012.
Silver ETF investment in India is a challenge because as of 2012 there are no Exchange Traded Funds (ETFs) that trade on Indian stock exchanges that invest in silver. To make a silver ETF investment in India, an investor has to consider opening a brokerage account in India that allows one to invest in foreign silver ETFs or opening a brokerage account in a foreign country outside of India that provides access to silver ETFs.
Since direct silver ETF investment in India is not possible via Indian stock exchanges, individual investors in India that do not have the resources to open domestic brokerage accounts that can trade foreign ETFs or foreign brokerage accounts in other countries may not be able to make silver ETF investments. Investors in this predicament that wish to invest in silver should consider alternative ways of investing in silver in India.
Individual investors in India that are shut out of the silver ETF market can invest in silver in India by buying physical silver or silver jewelry, buying units of E-Silver that represent 100 grams of silver, or buying silver futures via Indian futures markets.
For investors that can make a silver ETF investment in India via foreign silver ETFs, a prominent silver ETF that trade on stocks exchanges in the United States is the iShares Silver Trust (SLV), which holds physical silver bullion in warehouses and is a direct investment in physical silver. SLV is the preferred way to invest in a physical silver bullion ETF without exposing oneself to the risks associated with silver ETFs that derive their value from silver futures contracts.
For more aggressive silver investors in India that can make a silver ETF investment in India via foreign silver ETFs, a two times leverage silver ETF, known as the ProShares Ultra Silver (AGQ), provides 200% exposure to silver commodity futures. AGQ invests in a variety of silver financial instruments from swap agreements to option contracts in its effort to achieve a 200% price move performance in relation to the market price of silver that is priced in United States dollars for delivery in London, England.
Buying physical silver or investing in silver via other domestic means in India, rather than making an investment in a foreign silver ETF, may make more sense because buying overseas ETFs that are denominated in foreign currencies presents an investment risk. This is due to the risk of currency devaluation, which could impact the performance of a foreign silver ETF investment. The Indian rupee has lost value in recent years versus the United States dollar. If this devaluation trend continues, it could severely impact returns associated with silver ETF investment in India via foreign currency denominated silver ETFs.
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