Punters May Find Silver Bullet As Street, Copper Lose Bite

MUMBAI: Silver is gaining interest among local investors as prices are looking to bounce back. The strong equity markets and the correction of copper from recent losses have pushed the industrial metal’s prospects up. Besides, analysts indicate that while gold almost skirted the 1980 high, silver’s rise has not been in the same vein.

India Bullion’s (Chennai) Krishna Nathani says: “Silver generally sees twice the amount of volatility of gold. However, currently, it is not fluctuating as much in comparison.”

This does not make silver less risky to invest in, but the potential it offers is drawing more investors.
Bullion consultant Bhargava Vaidya says: “Silver is currently bouncing back from the steep fall it witnessed.” According to him, silver has the potential to bounce back, but this would only be temporary.

“Silver will not reach new highs in December,” he added.

In domestic futures, MCX March contract has seen considerable interest. The open interest has doubled from 4, 814 lots last Wednesday to 8,510 lots on Monday. The price has also declined to Rs 18,914 per kg from Rs 19,338 in the same period. The volumes traded have also risen substantially from 221.31 kg to 960.06 kg.

Analysts believe that the domestic interest is purely speculative, as the physical buying is very nominal. Silver price in the domestic spot market in Mumbai has moved down from Rs 19,255 per kg to Rs 18,720 in the last six days. Silver is also tracking gold and crude, which have seen a substantial decline in the last few days. As these commodities are bouncing back, silver also has the potential to bounce back in the immediate future. The industrial metal is also tracking copper, which had seen substantial decline last week.

According to industry estimates, industrial applications of silver can grow by 6% annually. Increasing industrial demand for silver is forecast due to strong economic growth in China, India, Vietnam, Russia, Brazil and other emerging economies. This lends the overall bullish sentiment to silver.