Silver rallies back from the lows

NAGPUR: Silver which has been now outshining the big brother gold in terms of returns has fast recovered its lows after the prices corrected substantially during the last month.
Silver in international market is once again close to its high of almost two decades. Its prices had touched $31.25 an ounce in January before falling to $26.5 an ounce. This was next to the high of $54 reached in the 1980s. Silver is now back to $30.8 an ounce, close to recent highs.
Traders expect the rally to continue. Gold, which too had reached $1431 per ounce in the same period and then fell to $1307, has recovered to $1375 an ounce though still far from the peak in international market.
Prices in domestic spot markets of both gold and silver are now close to peak levels at Rs 20,450 a tola (10 grams) and Rs 46,725 a kg respectively as against highs of Rs 20,900 and Rs 47,700.
A weaker rupee against the dollar has helped bridge the gap at home, said Amar Singh of Aditya Birla Money. Silver, which had fallen by almost 15% in the international market, has made a faster recovery that gold could in recovering from a 8% fall from the peak, he said.
Singh said this was the second highest level achieved by silver after it crossed $54 due to massive buying by Hunt brothers of US in the 1980s who wanted to create a silver pool. The current rally is supported by a strong industrial demand as well as a push by the base metals which also impact silver rates. Investment buying abroad is also one of the reasons.
Traders expect gold to touch another high if $1380 an ounce mark is breached. Bullion prices began to rebound after the Egyptian crisis deepened with money returning to gold as a safe haven asset, said a trader.
Nilesh Rathi of SMS Bhav, a bullion information agency, said gold has given a yearly return over 23% and silver has given more than double that. "However, fast rise in silver seems to be only due to its relatively lower gains in previous years," he added.
On domestic front though, retailers say high prices have hit the demand hard. Chetan Shah, a director in Bombay Bullion Association, said the demand for silver both for ornamental and investment purposes is down to negligible. There is a similar scene on the gold front too with not even good demand of physical gold despite the rallying prices.
(Source: http://timesofindia.indiatimes.com/city/nagpur/Silver-rallies-back-from-the-lows/articleshow/7511492.cms)