Buying silver ETFs? A CA explains the quiet markup that could dent your returns
Silver ETFs may offer digital convenience and SEBI oversight but right now, they might also be a bad deal.
As silver prices climb and investors rush in, some silver ETFs are trading at eye-watering premiums. Tata’s Silver Exchange Traded Fund, for example, is priced nearly 19% above its iNAV—the indicative net asset value, or what the fund is actually worth.
HDFC and SBI’s silver ETFs aren’t far behind, each with a 13.4% markup, according to data from 1 Finance Magazine.
Chartered accountant and wealth advisor Kanan Bahl is urging caution. “Rushing to buy silver ETFs? Wait,” he wrote in a LinkedIn post. “You may be paying 19% over silver’s market value to buy them.”
Bahl explains that while ETFs are typically a cost-efficient and regulated way to invest in silver, the current demand-supply mismatch is pushing prices far above fair value.
“There is a shortage of silver ETFs in the market,” he noted, “because people want exposure to silver as prices surge.”
His advice: don’t rely on the trading price alone. Instead, compare it with the ETF’s iNAV, which is available on the NSE’s website or your brokerage app.
“If the trading price is greater than the iNAV, prefer not buying,” Bahl said.
An alternative? Physical silver. Even with the added 3% GST, it might be a better value. “Yes, there are liquidity concerns,” Bahl acknowledged, “but buying silver ETFs at over 5% premium may not make sense despite the convenience.”
With all top 10 silver ETFs trading at premiums above 7.5%, Bahl’s point is clear: if you’re chasing silver, check the markup before you leap.
