Silver

Silver is a precious metal with a dual nature — it serves both as a monetary/investment asset (like gold) and as an industrial commodity with applications in electronics, solar panels, medical devices, and photography. This dual demand profile makes silver's price dynamics more complex and volatile than gold.

In India, silver can be traded on the Multi Commodity Exchange (MCX) through futures and options contracts. MCX Silver contracts are denominated in INR per kilogram, with standard lot sizes of 30 kg (Silver) and 5 kg (Silver Mini). The contracts provide leveraged exposure to silver prices, allowing traders to take positions without physical storage.

Physical silver investment in India has a long tradition, particularly in the form of silverware and coins. For modern investors, Silver ETFs have been introduced on NSE/BSE following SEBI approval, providing a convenient demat-based way to invest in silver without MCX trading. These ETFs track domestic silver prices and are backed by physical silver held in vaults.

The gold-silver ratio (how many ounces of silver it takes to buy one ounce of gold) is a key metric for precious metals traders. Historically this ratio has averaged around 60-70, but it has traded as high as 120 (during COVID panic in 2020) and as low as 30. Traders use extreme readings as a signal for relative value — a very high ratio suggests silver is cheap relative to gold and may outperform.

Silver prices in India are influenced by global prices (set on COMEX in USD), the INR/USD exchange rate, GST (currently 3% on silver), import duties, and domestic demand patterns (particularly strong during wedding season and festivals like Dhanteras). The Indian government periodically adjusts import duties on silver, which directly impacts domestic prices. Unlike gold, silver does not have a Sovereign Bond equivalent, making MCX and ETFs the primary investment routes.