Silver Could be New Gold; Prices May Rise 20% in 2017

Credit: SilverBullionBars

Credit: SilverBullionBars

2017 is being looked forward as a good year for silver, as stated by Director, Comtrendz Risk Management Services, Gnanasekar Thiagrajan. This is in all probability a positive trend for the white metal. Commodity experts and bullion traders feel that demand for silver will outperform gold in the coming months. Currently, silver is in great demand as it is used in solar panels and electronics sector. It also has an increasing demand in the home d├ęcor, and fashionable jewellery categories, and this has the traders and analysts estimate a 15-20% push in the price of silver. This was reiterated by General secretary, India Bullion & Jewellers Association (IBJA), Surendra Mehta, who said that the silver price next year, was expected to appreciate by 15 -20%.

In 2015, the consumption of silver in India was set around 7,000 tonnes. The industrial sector had consumed around 1,900-2,000 tonnes of this. In 2016 (from January to July), the imports of silver reduced to 2,111 tonnes from the 4,362 tonnes, as compared to the same period last year.

This year, the total imports would probably not cross 5,000 tonnes, as estimated by Bullion traders, as demand was low, and the traders who had imported silver in last few years, were reportedly offloading the metal in the marked for profits.

Mehta also stated that, in 2015, rural India found a sharp decrease in purchasing power, due to the drought. He added that the rains have been good, and with the cash flow increasing in the market, a good demand would emerge for silver in rural India.

In 2016, silver gained 16% in comparison to gold, which was reported to have appreciated 9%. Recently, the silver was trading at `38,500 per kg.

Thiagarajan stated, since November 8, the gold price had fallen, and the price of silver had dropped in tandem with gold. He added that the decline in silver price was lesser than gold. When the gold prices rallied, it was found that silver prices outperformed gold. In 2017, investors would get good returns in case they stayed invested for a longer horizon. He also pointed out that Indian consumers were concerned about the government putting a cap on gold holdings.

Whether silver would be the new gold in India, still remains to be seen. Meanwhile, the Indian government would be fighting to demystify the culturally ingrained attachment of gold by Indian consumers.

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