Rutam Vora (Commodity Online)
At a time, when gold investments have just become sluggish in yielding returns over past few months, silver is now taking the driver's seat to take the bullion traders on a ride.
After touching its historical high of over USD 1200 per ounce in late November and early December 2009, gold has remained range-bound between USD 1050 to USD 1150 per ounce, giving a stagnant feeling to the investors, whereas silver has remained more volatile compare to gold during the period. The grey metal has provided ample room for investors to make money as it gained from USD 16.5 per ounce in November 2009 to the highs of close to USD 19.5 in December, 2009 and fell to about USD 14.7 in early March 2010 and again rose to about USD 17.5 levels in the same month.
According to market analysts, silver has outperformed gold investments in terms of return on investments, where gold yields about 6-9% return on investments, silver is found yielding over 20% returns.
Historically, gold has remained hot favourite for the investors as its penetration of the USD 1000 per ounce mark and subsequent march towards USD 1200 have prompted endless speculation on where it will settle. But silver is found overtaking gold by a wide margin as the metal has gained significantly pushing prices well above USD 19 per ounce in recent trades. Although, the grey metal has now gained nearly 60% year-to-date, many investors think prices will continue to increase into 2010, with USD 25 per ounce an attainable target.
Mumbai-based bullion trader, Riddisiddhi Bullion Ltd (RSBL) is mulling to be one of the prominent players in silver trading especially as the company is said to be considering launching silver ETF in the Indian market. The rise of the ETF industry has made silver exposure easier to achieve than ever before. There are several silver ETFs, globally, using various strategies to deliver returns corresponding to changes in the spot price. However, India is yet to see silver ETFs being available to the bullion investors. As the market players anticipate lower-side returns from gold, silver is considered as a best bet in recent times.
However, there have been several opposition to the launch of silver ETF in overseas markets. The Silver Users Association, a nonprofit lobby group interested in keeping an orderly silver market, had led the opposition to the silver ETF. The group alleged the trust would take a large amount of silver off the market and push up prices, which would hurt firms that use the metal for business or industrial purposes and result in layoffs.
Some traders are expecting the ETF may usher in a new bull market for silver if it attracts money from individuals, advisers, institutions and hedge funds looking for a convenient way to get exposure to the precious metal. It is feared that if the silver ETF experiences demand similar to the gold ETFs, it may end up accumulating roughly 97 million ounces, which represents more than 15% of known silver inventories, making a tight market even tighter.