The rising prices of silver have been attributed to India’s renewed interest in white metal. In the third quarter of 2012, silver prices rose 25% thanks to increased volatility and healthy returns on silver ETFs. This behaviour change has subsequently attracted investors who have typically favoured gold investments, including gold’s own country – India.

India, responsible for 12.6% of total worldwide silver demand, views the white metal as an undervalued investment with good upside potential.

While the weak Indian currency has seen gold prices rose to a record high in 2012, silver prices have not exceeded their April 2011 record. Rupee-denominated silver has been quoted 20% lower than its record.

Silver futures contract volume traded on Multi Commodity Exchange showed a 30% rise in September compared to July numbers. Return-focused investors have decided to hold on to their investments in anticipation of a rise in silver prices over the next 3-6 months.

India has paused their buying pace for the two-week ‘shraddha period that ends on October 15 because it is considered inauspicious to buy either silver or gold. But investors will resume an uptrend on fresh buying as soon as the period ends. In fact, the succeeding nine days of Navratri are traditionally an auspicious time for shopping and starting any new ventures. The Indian silver demand will see its record high when the country starts preparations for the festival of Diwali, starting on November 13.