Sarfaraj, a first generation Mumbai-based bullion entrepreneur, is happy trading in silver since the cheapest precious metal has offered 27.92 per cent return on investment this year. The white metal surged a staggering 40.59 per cent in dollar terms, though.
Owing to the rising industrial sector demand, especially from countries like USA, Mexico, China, Canada, Australia and United Arab Emirates, silver price continued to remain bullish throughout the five months of the present calendar year.
The price in London, therefore, jumped to $15.62 an ounce (oz) on Tuesday compared to $11.12 an oz in the beginning of the year.
This percolated to the Indian markets too, resulting in the price spike to Rs 23,620 a kg as on Tuesday from Rs 18,465 a kg on January 2. “Being an entrepreneur, I saw enormous scope in silver and I invested which brought satisfactory return,” said Sarfaraj.
Although other precious metals like platinum and palladium have performed equally well, with 31.57 per cent and 30 per cent returns this year and with these metals being less popular in India, Sarfaraj continued to invest in silver.
As the costliest metal of the four precious metals group, platinum closed on Tuesday at $1,217 an oz in London compared to $925 an oz five months ago. Similarly, palladium surged to $242 an oz from $185 an oz in the period under consideration.
The most popular investment avenue in precious metal section, gold, offered a meagre 9.15 per cent return this year, thus, turning less attractive for investors.
In rupee terms, the yellow metal closed at Rs 14,855 per 10 gm in Mumbai spot market from Rs 13,610 per 10 gm on January 1. In dollar terms, however, the metal performed better to offer 12 per cent returns to close on Tuesday at $980 an oz compared to $875 an oz early this year.
Technically, both silver and gold are looking bullish as stock market rally and dollar’s depreciation will continue to pull these metals, said Naveen Mathur, Associate director (commodities and currencies) of Angel Broking.
Investors are looking at silver as an investment avenue and a part of their fund is now being diverted to the metal, Mathur added.
India consumes about 4,000 tonnes of silver of which imports of primary silver constitutes 77 per cent while 19 per cent comes from recycling of scrap jewellery. Hindustan Zinc with an annual production of 100 - 120 tonnes meets just 2.5 per cent of the country’s demand while Hindalco Industries meets the rest.
Hindustan Zinc (HZL) has been constantly increasing its silver production in the past years. By 2013 we would be producing 500,000 kgs of silver. The increase in supply would give a strong boost to the domestic ancillary industry,” Akhilesh Joshi, chief operating officer of HZL.
Hindustan Zinc by 2013 would produce over 500 tonnes of primary silver, thereby grabbing a big chunk from the import market and would strengthen the domestic industry.
