Silver has traditionally been a popular metal for China. However, the current trend indicates that China is now turning to the metal, not only for ornamental purposes but seeks it as an investment metal.
The Shanghai Gold Exchange (SGE) is the only exchange in China for trading silver. Since 2010, the silver futures exchange has continued to boom and has increased almost six times this year. Experts claim that people have turned towards the metal because of the stagnant stock and property markets with slow returns.
Stock and property markets have always been a hot favourite with Chinese investors. With the decline of these markets they have turned to the silver metal instead to park their money.
The investors are just speculating on the metal or purely gambling. They have no false illusions that the industrial demand may rise in the future. Even commercial banks have followed suit. Retail investors mostly prefer silver over gold because it has a lower investment portfolio.
Silver prices have been more volatile as opposed to gold this year. Due to this, silver investors had to suffer some major setbacks . However, the volatility has not deterred the silver investors. In fact, it has given them more room to speculate and gain profits . This bubble in the silver market can burst anytime. Once this monetary policy in China is sawed off a bit and the stock, property market surge again, silver will loose its lure.
Silver trading will then be actually based on the availability and industrial demand. There’s no arguing the fact that silver is primarily an industrial metal as opposed to gold.