Double digit returns: Is it a good time to invest in gold or silver funds amidst a rally?

We expect silver and gold to provide a good return this year after performing well last year.

Should you invest in gold and silver

Silver and gold funds performed well in 2022 and have performed great this year. Silver and gold have maintained top spots and left behind the mutual funds in the previous month. Silver funds have returned 4.01% in a month and 23.92% in the last three months. On the other hand, gold funds have returned 5.15% in one month and 13.54% in the previous three months. 

Twenty-four schemes invest in gold and silver funds are the new kids to the block. The category has 12 schemes, including FOFs and ETFs. 

Read: Should you invest in silver and gold amidst rising interest rates?

The Driving Force

So, what is the driving force behind these returns? Gold prices internationally have been increasing since November, as the Federal Reserve is anticipated to be less aggressive and moderate US CPI numbers. The US yields and the dollar have cooled off, supporting gold. Experts say that the secondary factors affecting gold prices have resulted in massive gold purchases by the central banks globally. The impact on gold demand is positive because Chinese markets are opening. 

ICICI Direct believes that silver might return more than gold in 2023, as it is likely that the silver market will remain in a deficit this year as well. A report by the online trading platform suggests that the demand for silver in industries will rise amid a rise in electric vehicles and green infrastructure commitments. We expect investment demand to continue because of fears of a recession, and Silver prices may reach Rs. 80,000 and $30 this year. 

What Affects the Growth

The market direction depends on the central bank policy, inflation, and growth this year, which is unpredictable. It can help investors diversify in a volatile market if they purchase gold. Gazal Jain, Quantum AMC Fund Manager, says that gold prices will positively impact if there is stagflation, a dovish central bank pivot, or a deep recession. 

Read: Is silver or gold better for investment?

Advisors and mutual fund managers have continued to suggest buying silver and gold to hedge your portfolio. While the outlook for the two assets is positive, the experts say allocation must not be over 10%. Silver has recently provided double-digit returns and tends to better gold during these rallies. Both metals are performing well amidst recession concerns and a weaker USD. Niranjan Avasthi, Edelweiss AMC, suggests that silver and gold will continue to perform well, and investors should add them in small amounts to their portfolios.

Best Gold ETFs In India

Best Gold ETFs In India

Best Silver ETFs in India

Best Silver ETFs in India

Image Source:

https://economictimes.indiatimes.com/nippon-india-silver-etf/mfinvestment/schemeid-41984.cms

https://groww.in/blog/best-gold-etfs-in-india

Conclusion

Investors wanting to invest in funds must not expect high year-on-year returns, as it is impossible to repeat excellent year-on-year performance for asset classes. Keeping a lower expectation from silver and gold is a good idea, and using it as a hedge is the best way to go. 

Is silver the new gold?

Silver and gold funds performed well in 2022 and have performed great this year. Silver and gold have maintained top spots and left behind the mutual funds in the previous month. Silver funds have returned 4.01% in a month and 23.92% in the last three months. On the other hand, gold funds have returned 5.15% in one month and 13.54% in the previous three months. 

Twenty-four schemes invest in gold and silver funds are the new kids to the block. The category has 12 schemes, including FOFs and ETFs. 

Read: Should you invest in silver and gold amidst rising interest rates?

The Driving Force

So, what is the driving force behind these returns? Gold prices internationally have been increasing since November, as the Federal Reserve is anticipated to be less aggressive and moderate US CPI numbers. The US yields and the dollar have cooled off, supporting gold. Experts say that the secondary factors affecting gold prices have resulted in massive gold purchases by the central banks globally. The impact on gold demand is positive because Chinese markets are opening. 

ICICI Direct believes that silver might return more than gold in 2023, as it is likely that the silver market will remain in a deficit this year as well. A report by the online trading platform suggests that the demand for silver in industries will rise amid a rise in electric vehicles and green infrastructure commitments. We expect investment demand to continue because of fears of a recession, and Silver prices may reach Rs. 80,000 and $30 this year. 

What Affects the Growth

The market direction depends on the central bank policy, inflation, and growth this year, which is unpredictable. It can help investors diversify in a volatile market if they purchase gold. Gazal Jain, Quantum AMC Fund Manager, says that gold prices will positively impact if there is stagflation, a dovish central bank pivot, or a deep recession. 

Read: Is silver or gold better for investment?

Advisors and mutual fund managers have continued to suggest buying silver and gold to hedge your portfolio. While the outlook for the two assets is positive, the experts say allocation must not be over 10%. Silver has recently provided double-digit returns and tends to better gold during these rallies. Both metals are performing well amidst recession concerns and a weaker USD. Niranjan Avasthi, Edelweiss AMC, suggests that silver and gold will continue to perform well, and investors should add them in small amounts to their portfolios.

Best Gold ETFs In India

Best Gold ETFs In India

Best Silver ETFs in India

Best Silver ETFs in India

Image Source:

https://economictimes.indiatimes.com/nippon-india-silver-etf/mfinvestment/schemeid-41984.cms

https://groww.in/blog/best-gold-etfs-in-india

Conclusion

Investors wanting to invest in funds must not expect high year-on-year returns, as it is impossible to repeat excellent year-on-year performance for asset classes. Keeping a lower expectation from silver and gold is a good idea, and using it as a hedge is the best way to go. 

Is silver the new gold?

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