Investing in Gold , Silver and Other Metals from India: Complete Guide

Metals have re-emerged as a serious asset class in global portfolios. What was once treated in India mainly as gold jewellery or a crisis hedge has evolved into a multi-metal investment universe spanning gold, silver, copper, platinum, palladium, and the companies that mine them.

Over the last market cycle, metals delivered equity-like returns, often when equities struggled. At the same time, structural changes — such as the unavailability of Sovereign Gold Bonds (SGBs) — have forced Indian investors to rethink how they access this asset class.

This article is a complete, end-to-end guide covering:

• Performance of metals vs other assets

• Indian ETFs and mutual funds (with AUM context)

• Global metal ETFs (gold, silver, copper, platinum, palladium)

• Mining company ETFs and how they differ from metal ETFs

• Metal futures in India (MCX) and globally (COMEX/LME)

• Dollar (USD) exposure benefit for Indian investors

• ETF execution risks: price vs NAV vs iNAV

• Practical portfolio construction frameworks

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1. Why metals deserve a place in portfolios

Metals play three distinct roles that equities and bonds cannot fully replicate:

1. Monetary hedge
   Gold performs well when real interest rates fall, and confidence in fiat currencies weakens.

2. Cyclical growth exposure
   Copper, silver, and platinum benefit from industrial demand, infrastructure spending, and energy transition.

3. Crisis diversification
   During financial stress, metals often outperform risk assets.

Crucially, metals are supply-constrained assets. You cannot quickly increase gold or copper supply when prices rise, which leads to sharp cyclical moves.

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2. Performance comparison: metals vs other assets

Indicative performance snapshot (recent cycle)

Key insight:
Mining equities and global ETFs often outperform physical metal exposure, especially when currency effects are included.

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3. Sovereign Gold Bonds (SGBs): no longer relevant

For years, SGBs were the most tax-efficient way to own gold in India. Today:

• No fresh issuances

• Secondary market liquidity is weak

• Large bid–ask spreads and pricing distortions

Conclusion

SGBs are no longer relevant for fresh allocation
ETFs and mutual funds are now the primary vehicles.

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4. Metal ETFs vs Mining ETFs (critical distinction)

This distinction is frequently misunderstood.

Metal ETFs

• Track the price of the metal

• Usually physically backed

• No earnings or cash flows

• Lower volatility than miners

Mining ETFs

• Invest in companies that mine metals

• Returns depend on:

  • Metal prices

  • Cost structures

  • Capital discipline

  • Balance sheets

• Much higher volatility

• Can outperform sharply in bull cycles

Think of mining ETFs as leveraged metal exposure with equity risk.

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5. Indian-listed metal ETFs (commodity exposure)

Gold ETFs in India (physical backing)

ETF	Approx. AUM (₹ Cr)	TER (%)*	Liquidity
Nippon India Gold ETF (Gold BeES)	10,000+	~0.79	Very High
SBI Gold ETF	6,000+	~0.80	High
HDFC Gold ETF	5,000+	~0.59	High
Kotak Gold ETF	3,000+	~0.55	Moderate–High

Long-term gold exposure, SIPs, portfolio hedge.

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Silver ETFs in India (physical backing)

ETF	Approx. AUM (₹ Cr)	TER (%)*	Liquidity
Nippon India Silver ETF	6,000+	~0.79	High
HDFC Silver ETF	4,000+	~0.59	High
Kotak Silver ETF	2,500+	~0.59	Moderate
Aditya Birla Silver ETF	2,000+	~0.59	Moderate

They behave like a high-beta asset.

Volatility in metal ETFs is driven by the underlying metal price, not the fund house.
A Kotak or Nippon silver ETF will move almost identically over time.
Investors should compare TER, liquidity, and tracking error, not “risk labels”.

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Metal sector ETFs in India (equity, NOT commodity)

These track company profits, not metal prices.

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6. Indian mutual funds investing in metals

Indian mutual funds mainly offer metal exposure via fund-of-fund structures.

Gold mutual funds / Gold savings funds

Trade-off:
Higher expense ratios vs ETFs, but easier automation.

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7. Global metal ETFs (commodity exposure)

Global markets provide far broader metal coverage. To invest in Global ETFs, investors need to set up an account with a platform that has a global brokerage tie-up. Platforms that I have used for global investing

• Vested
• Interactive Brokers
• Stockal

Global gold ETFs

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Global silver ETFs

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Copper exposure

Copper is a global growth and electrification trade.

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Platinum ETFs

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Palladium ETFs

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Multi-metal basket ETF

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8. Global mining & metals equity ETFs (leveraged exposure)

Mining ETFs often outperform metals in bull cycles.

Gold mining ETFs

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Silver & precious metal miners

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Broad metals & mining

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Copper & base metal miners

⚠️ Mining ETFs = equity risk + metal cycles
They fall harder during downturns.

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9. Metal futures in India & globally (MCX, COMEX, LME)

ETFs are ideal for investors. Futures are primarily trading and hedging instruments.

Metals traded on MCX (India)

Key characteristics

• INR-denominated

• Margin-based (leverage)

• Daily mark-to-market settlement

• Physically deliverable (rarely used)

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Global metal futures

These markets drive global price discovery.

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Futures vs ETFs — critical differences

Key rule:
Futures are not buy-and-hold instruments.

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10. ETF price vs NAV vs iNAV (execution discipline)

This is where many investors lose 1–3% instantly.

NAV

• End-of-day intrinsic value

iNAV

• Real-time fair value

• Based on live metal prices

• Best reference during trading hours

Market price

• Actual traded price

• Can deviate due to liquidity or demand–supply imbalance

Best practices

• Always check iNAV

• Use limit orders

• Avoid panic buying

• Extra caution for silver and low-AUM ETFs

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11. Dollar (USD) advantage of global investing

Global ETFs add a currency layer.

Total return =
Asset return (USD) + USD-INR movement

Example:

• Gold ETF return: 10% (USD)

• INR depreciation: 4%

• Total INR return ≈ 14%

This currency convexity is a structural benefit for Indian portfolios.

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12. Risk framework

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13. Portfolio construction framework

Conservative

• 5–10% Gold ETF

• Optional 1–2% Silver

Balanced

• Gold + Silver

• Small allocation to global miners

Aggressive/tactical

• Add copper or platinum

• Mining ETFs and futures (with strict sizing)

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Final takeaway

• SGBs are no longer relevant

• ETFs have replaced them

• Metal ETFs ≠ Mining ETFs ≠ Futures

• Global ETFs add USD alpha

• Execution (iNAV) matters more than entry timing

Metals reward discipline, correct structure, and patience — not headline chasing.

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