If you’re thinking of buying precious metals this Diwali, look beyond gold. Led by industrial and investment demand, the price of silver has risen by almost 60 per cent since January 2009 compared to 23 per cent rise in the price of gold.
“Silver is more of an industrial metal,” said Jayant Manglik, president, Religare Commodities. “With fears of a slowdown behind us and industrial activity rising, its prices have surged.”
While industrial demand has driven silver prices up by 31 per cent in the past six months, investment demand has also kept pace.
“There has been a rise of 26 per cent in iShares Silver Trust Exchange Traded Fund (ETF),” said Aurobind Prasad, head of research, Karvy Comtrade. A silver ETF is a mutual fund that buys silver on behalf of investors and converts them into units that can be traded on a stock exchange.
Adding momentum to this rising silver demand is constraints in the metal’s supply. Silver is extracted as a byproduct of base metals such as copper, lead and zinc.
“Amid the slowdown, base metal producers reduced their production and the likelihood of rise in supply looks grim over the next few months as there are talks of production drop in Peru and strike in some copper mines,” said Manglik.
{{/usCountry}}“Amid the slowdown, base metal producers reduced their production and the likelihood of rise in supply looks grim over the next few months as there are talks of production drop in Peru and strike in some copper mines,” said Manglik.
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