 "Time to accumulate silver")
A lot of things are falling into place for silver. India has emerged as the world's biggest importer, as declining prices make the metal attractive for consumption as well as investment. The time has come for those accumulating silver to benefit.
Domestic investors don't have the option of buying paper silver but the trend of buying physical silver has caught on. This is reflecting in imports, which were 1,921 tonnes in 2012 and have risen to 6,843 tonnes in 2014, equivalent to 21 per cent of the global supply.
Despite record imports in the past two years, imports crossed 5,000 tonnes in the first eight months of 2015 and now estimates suggest the year could end with 8,000 tonnes of silver imports.
"The rising demand is because of low prices. People are buying silver for jewellery, as well as for investment. The festive season also helps demand to scale up," said Monal Thakkar, director of the Ahmedabad-based Amrapali Group, one of the country's largest silver jewellery and article dealers and manufacturers.
From April 2011, silver has fallen faster than gold, as reflected in the ratio of how many ounces of silver can be bought for one ounce of gold. The ratio stood at 31.7 in April 2011, which was a 27-year low. When silver prices are high, the ratio is low and vice-versa. At the end of last month, the ratio stood close to 80, reflecting the gravity of fall in silver prices. At present, it is trading around 76.
Ajay Kedia, director of Kedia Commodities who tracks the ratio closely, said, "We will see silver now outperforming gold." According to him, this means even if one is not bullish on precious metals, past trends suggest that silver will fall slower than gold and when precious metals rebound, silver will rise faster. Silver is also a high-beta commodity (beta of 4) compared to gold. For every dollar fall in gold it falls by $4 and vice-versa.
There are other reasons why silver could head higher. Silver largely tracks the base metal bellwether copper. The price of copper has rebounded eight per cent in the last two weeks from its six-year low in August. Most analysts believe China's stimulus package will drive copper demand. Notably, the supply of the red metal is falling as many mines, including that of Glencore, have announced production cuts.
The Edelweiss Group's commodity arm is among the top silver importers in the country with around 15-20 per cent share in India's silver imports. DP Jhawar, president and head of the commodities business at Edelweiss, said "Rural demand for silver is also quite strong." He sees a limited downside for silver in rupee terms.
Domestic investors don't have the option of buying paper silver but the trend of buying physical silver has caught on. This is reflecting in imports, which were 1,921 tonnes in 2012 and have risen to 6,843 tonnes in 2014, equivalent to 21 per cent of the global supply.
Despite record imports in the past two years, imports crossed 5,000 tonnes in the first eight months of 2015 and now estimates suggest the year could end with 8,000 tonnes of silver imports.
"The rising demand is because of low prices. People are buying silver for jewellery, as well as for investment. The festive season also helps demand to scale up," said Monal Thakkar, director of the Ahmedabad-based Amrapali Group, one of the country's largest silver jewellery and article dealers and manufacturers.
From April 2011, silver has fallen faster than gold, as reflected in the ratio of how many ounces of silver can be bought for one ounce of gold. The ratio stood at 31.7 in April 2011, which was a 27-year low. When silver prices are high, the ratio is low and vice-versa. At the end of last month, the ratio stood close to 80, reflecting the gravity of fall in silver prices. At present, it is trading around 76.
Ajay Kedia, director of Kedia Commodities who tracks the ratio closely, said, "We will see silver now outperforming gold." According to him, this means even if one is not bullish on precious metals, past trends suggest that silver will fall slower than gold and when precious metals rebound, silver will rise faster. Silver is also a high-beta commodity (beta of 4) compared to gold. For every dollar fall in gold it falls by $4 and vice-versa.
There are other reasons why silver could head higher. Silver largely tracks the base metal bellwether copper. The price of copper has rebounded eight per cent in the last two weeks from its six-year low in August. Most analysts believe China's stimulus package will drive copper demand. Notably, the supply of the red metal is falling as many mines, including that of Glencore, have announced production cuts.
The Edelweiss Group's commodity arm is among the top silver importers in the country with around 15-20 per cent share in India's silver imports. DP Jhawar, president and head of the commodities business at Edelweiss, said "Rural demand for silver is also quite strong." He sees a limited downside for silver in rupee terms.