Mumbai: The dream run, rather ‘silver run’ has reached its peak with prices falling 9% on the eve of Dhanteras. On Saturday, October 18, Silver prices dropped to ₹1,72,000/kg, from an all time high of ₹ 1,90,000/kg on October 15 in the local markets.
The correction comes at a time when economic uncertainty has driven investors towards safe haven assets- with gold, silver seeing an surge in prices from both retail and institutional investo₹
This year has been particularly significant for the ‘cheaper alternative’ to gold, as Silver ETFs in India have seen a record inflow of almost ₹8,603 crore upto Diwali, surpassing the total investments of last year. As the Silver ETFs are backed by physical silver, the renewed interest has jacked up valuations, forcing most ETFs to halt fresh investments in their funds.
Unlike gold, which is primarily used as a safe haven asset, more than 60% of silver’s demand comes from industrial applications, including solar panel and missile manufacturing, besides ornamental value.
However, supply remains limited, with demand increasing in India amid the festive season. Also, central banks do not hoard silver as they do for gold in times of uncertainty, making it an affordable asset in such times.
According to a Bloomberg report, almost 15 million ounces of silver have been withdrawn from the Comex futures exchange in New York, with an attempt to ease the supply shortages.
Silver was trading at $51.09 per ounce in spot prices on October 18, a tad lower than the $54.49 all time high reported on October 17.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Readers should conduct their own research or consult with a qualified financial advisor before making any investment decisions.
