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					Silver prices likely to follow gold's lead - analysts

Silver's demand as a safe haven investment remains intact with investors
in India holding on to the white metal, as slow growth coupled with the
ongoing debt issues in the US and the Euro zone support demand.

Author: Shivom Seth

MUMBAI   -

Silver prices witnessed a jump in India today, on the back of dollar
weakness. Over the last four years, even as the global markets have been
uncertain, silver has proved to be an ideal investment and has provided
huge returns to investors, traders said.

Traders pointed out that the price of the white metal has almost doubled
from $630.38 per kilo last year in July to $1300.51 per kilo this July.
``There is huge demand from investors and even soaring industrial demand
has affected the price of silver in India,'' said Somantilal Shah,
bullion retailer.

Between August 2010 and April 2011, Shah added, silver climbed around
175% and fell 33% after which ``everyone has been waiting for a bull
run.''

Traders said brisk buying by stockists and investors amidst reports of a
firming trend in the overseas markets, led to a rise in silver prices.
Gold in global markets, which normally sets a price trend on the
domestic front, rose by $11 to $1,777.20 an ounce as inflation in China
boosted investor and central bank demand.

As Asit Majordia, economic analyst at an investment bank points out in a
note to his clients, China's major economic indicators slowed in July.
The year-on-year growth in industrial output decelerated slightly to 14%
in July, 1.1% lower than in June.

"However, that figure is still higher than the historic low of 13.3%
registered in May. China's inflation accelerated to a 37-month high in
July on surging food costs, putting the government in a tough position
with worsening global liquidity in sight. High inflation will ensure that
more people in China will move to precious metals. This will also be
reflected in India, which is also battling painful inflation,'' said
Majordia.

Tarodimull Chetan, bullion retailer was of the opinion that silver demand
in China and India ``has increased sharply in recent years as more
investors use silver as a store of value. Investors in both India and
China are buying silver to hedge market losses. With stock markets
uncertain this year, silver has turned out to be an ideal investment for
most investors.''

Bullion management firm CommTrendz Research and Fund Management's senior
official T Gnanasekar said that silver has been lagging but could bounce
back quite sharply. ``Anywhere near $1313.76 could be a good level to buy
MCX September silver for a possible target of $1338.04, though
forecasting prices can be tricky, especially for a commodity such as
silver.''

For many investors, there has been a fundamental shift with many
perceiving silver as more affordable than its costlier cousin gold.
Though both the precious metals climbed in Mumbai on buying by stockists
and investors, gold gained $3.31 to $579.59 per 10 gram, while silver
added $24.28 to $1,329.21 per kilo.

Traders said buying by local jewellers for the coming marriage season
also supported the uptrend in the precious metal's price.

"Silver happens to be the most happening commodity these days. The
unprecedented surge in silver prices and a 30% sudden crash slightly
dampened demand. But investors are back, and in India the demand for
silver jewellery is rising rapidly,'' said Gnanasekar.

Export data from the Gems and Jewellery Export Promotion Council, shows
that silver jewellery export from the country has zoomed by a robust 34%
for the month of April. The provisional export of silver jewellery for
the period April 2011 at $40.33 million showed a growth of 34.57% over
the comparative figure of $29.97 million for April 2010.

Meanwhile, the provisional export of gold jewellery and gold medallions
for the period of April 2011 at $1,023.96 million showed a decline of
0.43% over the comparative figure of $1,028.38 million for April 2010.

Source:
http://www.mineweb.com/mineweb/view/mineweb/en/page32?oid=133571&sn=Detai
l&pid=102055

				
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posted:8/21/2011
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