Silver ETFs outshine gold with 3.3x growth in volume: What you should know

Business Standard

05-05-2025

This year's Akshay Tritiya saw an impressive surge in demand for Gold and Silver ETFs, with the combined industry volume increasing by nearly 3 times compared to last year. The total volume jumped from Rs 224 crore in 2024 to Rs 644 crore in 2025, marking an astounding growth of 2.9x, as per NSE data.
This surge highlights the growing popularity of Exchange-Traded Funds (ETFs) as an attractive investment avenue during the festive season.
Gold ETFs: Strong Growth, But Silver Outshines
Gold ETFs witnessed a significant rise in volume, growing from Rs 130 crore to Rs 331 crore in the last one year as of 30 April 2025, which represents a 2.5x increase.
However, Silver ETFs saw an even more remarkable jump, with volumes soaring from Rs 95 crore to Rs 313 crore, a massive 3.3x growth compared to last year. This made Silver the standout performer in terms of growth in traded volumes.
As more people invest in physical gold too, there is rising awareness about the need to confirm the quality of the product being bought.
What's driving this ETF surge? As per Value Research, the following forces are at work behind the jump in volumes:
Convenience: Investors can gain gold or silver exposure without worrying about purity or safe storage. ETFs trade through a demat account, just like stocks.
Cost efficiency: Physical gold comes with making charges, storage costs, and purity risks. In contrast, ETFs carry lower transaction costs, and importantly, better liquidity reduces trading friction.
Investor sentiment: Historically, Akshaya Tritiya has boosted physical gold sales. Now, we see similar momentum on exchanges, with industry-wide gold ETF turnover up 2.5 times year-on-year and silver ETF turnover up 3.3 times. Silver's faster rise suggests investors are looking beyond gold for diversification.
For context, back in FY25, the average daily combined industry volume (gold + silver ETFs) hovered around 60 per cent of total ETF turnover, reflecting the growing footprint of these products in the Indian market.
Lower impact costs:
"On Akshaya Tritiya 2025, industry-wide data showed impact costs averaging 20 basis points (bps) for gold ETFs, but some leading ETFs delivered costs as low as 2 bps. For silver ETFs, the industry average stood at 32 bps, while the most liquid products offered costs closer to 3 bps.
High liquidity helps ETFs track underlying asset prices more tightly, giving investors more accurate exposure," said Value Research.
Should you add gold or silver ETFs to your portfolio?
While gold and silver ETFs are increasingly popular, they serve a specific role. Value Research explains in detail:
Diversifiers: Gold and silver historically show low correlation to equities, making them useful for reducing portfolio risk.
Precious metals tend to perform better during inflationary periods or when geopolitical risks rise. However, they are not primary growth assets.
"Over long periods, equities have outperformed both gold and silver. For instance, over the past decade, gold has delivered an average annualised return of around 7-8 per cent, while Indian equity markets have returned closer to 12-14 per cent per year. Silver adds a slightly different dynamic: it's partly an industrial metal, so prices are influenced by manufacturing demand as well as investor sentiment. This can make silver ETFs somewhat more volatile but also an interesting diversifier for those who understand the risks," said Value Research in a note.
73% consumers surveyed give thumbs up to gold hallmarking but most unaware of how to validate authenticity Meanwhile, according to a survey conducted by LocalCircles, 65% of consumers who bought gold jewelelry in the last 12 months confirm that it was hallmarked; 11% say it wasn't while 24% could not tell. The six-digit Hallmarking Unique ID (HUID) or mark, which started from July 1, 2023, has been to safeguard consumers from fraudulent practices related to the purity of gold and silver, while positioning India as a major gold hub, and to enhance export competitiveness.
Hallmarked gold or silver is stamped with a tiny mark by the national standards body under the Bureau of Indian Standards (BIS) Act. The mark indicates the exact purity of the metal as per the prescribed standards of regulatory authorities. For example, a hallmark reading "22K" signifies that 22 out of 24 parts of the metal are gold.
Apart from the purity of the piece, the mark shows that it has been verified in a licensed laboratory certified by the Bureau of Indian Standards and the jeweller's unique identification stamp. It is advisable to only purchase hallmarked gold items such as jewellery, coins, and bars from the market to safeguard oneself from being misled. Not many know that hallmarking is not mandatory for gold jewelry items like Kundan, Polki and Jadaau jewelry; any article weighing less than two grams; any article made of gold thread; gold bullion in the shape of bar, plate, sheet, foil, rod, wire, strip, tube or coin. Further, hallmarking is also not mandatory for gold watches and fountain pens.
Only 18% of consumers surveyed who bought gold jewellery in the last 12 months are aware that hallmarked articles must carry a six-digit alphanumeric code, the survey added. As 73% of consumers surveyed shared, mandatory hallmarking has increased their trust in the gold buying process. The government needs to ensure that all the jewellers across the country comply with hallmarking requirements and are subject to audits and enforcement action if found violating the rules.