The unabated volatility in gold price has forced India's middle-class consumers to try out a cheaper option and their obvious choice now is to opt for silver jewellery.After an initial poor performance,last monsoon season in India improved and recovered the deficit in rainfall in the concluding stage.This has helped improve the economy of the country.
Now the people are eager to buy some cheaper option in jewellery and also to make investment for good returns which they have found in silver.As per a report published by India's Minerals Exploration and Development Department,India's silver demand is likely to go beyond 6000 ton yearly by 2016-17 from the present consumption of 3000 tons,which may reach up to 10,000 ton by 2025.This positive outlook is based on the increased use this metal is likely to make on investment,jewellery and industrial purposes.
Another report titled"Silver Market Review"published by a London-based global precious metals consultancy Thomson Reuters GFMS reveals that increased Investment demand can push up the price of silver by 12%to settle at$36 per ounce before the end of this December and to$50 per ounce by the end of 2013.Speaking in Rupee terms,this trend would translate in India at around Rs 70,000 per kg by end of December and over Rs 90,000 next year.At present silver is trading at around Rs 63,000 per kg in India.
However,the report also made a cautious note by mentioning that the sentiment could prove volatile and that there could still be a scope for downside as regards the price in the short term,because the sluggish economy in developed countries may also see investors shy away from such risky assets.
A good alternative of gold?
Figures reveal that industrial use of silver is set to decline by a mere 6%primarily because of sluggish economic activities in the industrialized world with marginal increase in mine production in the tenth successive year in 2012.This may have resulted in heavy destocking down the supply chain.As a result,with silverware and photography continuing their downtrends,the only shining spot was jewellery demand,which is projected to increase this and the next year.If we look at the recent years'figures of the silver prices,they show that the white metal had recorded an average annual price of$35.22 per ounce in 2011 which was almost double from$14.66 per ounce in 2009.On 28 April 2011,the prices touched a record height of about$50 per ounce,with the global uncertainty adding to the demand for silver as a safe haven.In the later part of the same year,stunted industrial and economic growth in developed and emerging economies had led the prices to lower some levels.
The silver prices were on an up-trend from January to March 2012,trading at$37 per ounce because of strong monetary policies adopted by the European Central Bank.Later on,the prices had started receding on fear of slow world economic recovery in the America which increased crisis in the Eurozone and the Chinese economy losing steam.Now the prices have rebounded from$28 per ounce to$34 in the wake of concrete positive policy initiatives by central bankers in an effort to revive the world economy.
With the congenial atmosphere created for more silver demand globally,India's Gem&Jewellery Export Promotion Council(GJEPC)is hopeful of improving its silver export figures in 2013.Sources from the GJEPC say that India's silver jewellery exports are likely to go up by 35%in 2013 as the US and Europe appreciate more of silver jewellery than gold because of volatility in gold prices and growing slowdown pressures.
So,will silver outperform gold?Well-known financial service provider firm'Morgan Stanley'feels that silver would fare better than gold whenever risk sentiment improves on a sustained basis.The firm believes that the precious metals have outperformed most other assets classes recently,particularly after the US elections.
