Mumbai: Silver prices have surged to record highs, driven mostly by increased industrial demand and a supply that cannot keep up to it. The metal has rallied sharply in the international market, with spot prices reaching almost $65 per ounce, even as production struggles to keep up with demand from manufacturers of solar panels, electric vehicles, electronics and advanced manufacturing.
This increased demand has seen investors making a beeline for the poorer cousin to gold, where prices have risen almost 124% on a year-to-date basis. In India, the demand up to Diwali saw investors buying into silver ETFs in record numbers, as they have helped net them inflation-beating returns that are usually not possible in such a short period for other asset classes. Up to October, almost ₹8,602 crore of investor money was channelled into these ETFs, which are backed up by the physical metal. Fund houses had been forced to stop further inflows in these funds, as the risks for a market bust were real.
Most investors are looking at silver as a hedge against the dollar, with weak economic data and expectations of a change in the Federal Reserve’s interest rates have further evoked interest. Silver’s dual role as an investment vehicle and an industrial commodity have further fuelled demand.
