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Silver Investing in India

26 Oct News | Comments

India’s festive-season love of gold is famous. But silver is a year-round investment…

INDIA CONTINUES
to be the largest Gold Bullion consumers in the world, writes Rutam Vora in Ahmedabad for Commodity Online.

Gold gets maximum attraction at the time of religious festivals. But the latest analyst outlook on Silver Bullion, which says the metal will touch 1 lakh Rupees per kilogram [Rs 100,000…up from the current Rs 35,900 per kilo] in Indian markets in 2-3 years, in fact keeps bullion-dealer counters running all round the year.

As has been perceived for a long time now, Silver Investing has remained more bullish and volatile than gold. Some of the analysts attribute this volatility to the lesser price of the metal in comparison to Gold, while few others find it more promising due to its vast applicability for other usages than jewelry.

Silver has been extensively used for industrial applications including switches from 3 volts at less than 1 ampere to massive switches and circuit breakers. Besides this, the metal is also extensively used in mobile and several other electronic chipsets.

In a phone interview with CommodityOnline.com, Prithviraj Kothari – managing Director of Riddisiddhi Bullions Ltd (RSBL) – now says that Silver Prices will remain more volatile than other precious metals, as it has higher demand outside the jewelry market.

"Silver has emerged as a safer investment as the metal has applications not only in jewelry but also in industrial manufacturing. It has been seen recently that Silver Investing gives higher returns than gold.

"I believe that considering the pace of industrial growth in India, the demand for silver will shoot up further leading the prices to touch Rs.1 lakh a kilogram in next 2-3 years."

On the Multi Commodity Exchange (MCX) Silver futures traded at Rs.35,438 per kg today.

According to Kothari, liquidity fears in the global economy and strong domestic markets will lift prices to hit this level without much efforts.

"Considering the Diwali-to-Diwali period as a year [early Nov.], the return from Silver Investing was 24% [in Rupees], while gold yielded 22% returns over last one year. I am bullish on silver and the demand will keep rising in the domestic markets."

Meanwhile, London-based analysts at Deutsche Bank announced earlier this month that Silver Prices may climb as much as 21% next year against the US Dollar on rising demand, both for investment as well as industrial use.

Daniel Brebner, an analyst at Deutsche Bank, noted that silver has outperformed gold, global equities, Treasuries and most industrial metals this year, and may peak toward the end of 2011 at $26.50 per ounce.

In the international markets, the Silver Price is currently hovering around $23.67 per ounce.

Considering the industrial applications of silver as the basis for its surge, however, a slack period in the industrial sector might hamper the Silver Price. This was seen during the global financial crisis, when Silver Prices fell much faster and further than gold in late 2008.

But going by Silver Investment experts and traders, the long-term price outlook for the metal seems rosy.

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