Moneycontrol Pro Panorama | Metals on a roll, how should you invest?

For retail investors, the best way to take exposure to precious metals and other commodities is through ETF's.

Dear Reader,

The best way to start the year 2026 would have been to buy a large chunk of silver. The lucky few who have done that would be brimming with joy now. The precious metal climbed to record highs this week, rising as much as 28 percent so far this calendar year.

Silver prices rallied in 2025 amid tight supplies, drop in inventories and spurt in demand. However, the view on silver is changing. It is no longer seen as a speculative bet. The demand drivers for silver and other metals such as aluminium and copper are broadening. They are increasingly being used in the industries of the future -- electronics, clean energy, electric vehicles and others.

Copper prices have also hit record highs on strong demand drivers, as discussed by Shishir Asthana here.

“The new phase for metals markets will be shaped by diversified demand sources driven by electrification, defence and digital infrastructure, slower supply responses amid more constrained and politicised supply,” ING said in an update on metals.

Heading into 2026, analysts expect copper, aluminium, silver to remain in tight demand-supply equilibrium, supporting prices. Citi Research has recently reaffirmed its bullish view on precious metals.

As precious metals gold and silver see steady demand, analysts are advising investors to make them part of their portfolios. For retail investors, the best way to take exposure to precious metals and other commodities is through exchange traded funds (ETFs). Buying physical metal can pose storage issues. Another way is to look for companies that manufacture them.

Hindustan Zinc is one such company. The company, which released results on January 19, reported healthy growth in revenues and earnings. The manufacturer of zinc and silver is benefiting from rising metal prices. In Q3 FY26, silver is estimated to have contributed as much as 44 percent of the company’s profits. With the outlook for silver prices firm, analysts are revising upwards their earnings estimates for the company.

“Valuations, at 9.4 times FY27E EV/EBITDA are above last 10-year average of 7.3x, but justified by rising share of silver in EBIT,” analysts at Jefferies India said in a note on Hindustan Zinc. EV is enterprise value. EBITDA is earnings before interest tax depreciation and amortisation.

That said, investors should be mindful of the risks associated with metals and commodities. They are prone to extreme volatility. Prices are sensitive to demand-supply changes. With prices already rising significantly, investors would do well to temper their return expectations.

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R Sree Ram Moneycontrol Pro