Silver is fast surging in price and in fact the silver in price terms since the beginning of the ongoing fiscal year has even outdone gold in price traction. After hitting seven-year high on July 15, 2020, the metal is now again close to Rs. 53000 per kg. On July 17, 2020, silver September contract on the MCX settled at Rs. 52899 per kg.
Here we will tell you the prospects of silver going ahead and who should invest in silver?
Industrial activity has now resumed after a substantial halt due to coronavirus led lockdown and as it is supply remains limited due to lower mining and hence prices are finding support on the upward side.
Who Should Invest In Silver?
Historically, silver has reached very high price level of up to Rs. 75000 per kg in 2011 but experts suggest it is not for cautious customers as there is huge volatility in the precious metal of the degree which is twice that of gold's. And standard deviation which signifies the risk of price movement in the case of silver stands at 27-28, while for gold it is at 12".
With Risk Comes Super Return In Silver
Feroze Azeez, deputy chief executive officer, Anand Rathi Private Wealth says "With silver, the swings on either side are going to be amplified. Anything with larger volatility means that when it rises, it rises swiftly. When it falls, it falls just as swiftly. Whenever there is momentum in buying silver, you will see a larger swing because there is risk aversion".
An instance in the report suggest that between the period March 31, 2020 to July 15, 2020, while gold has recouped gains of 14% in price, silver has scaled by 33% from levels of Rs. 39200 to Rs. 53050 on July 15, 2020
And with enough room to still scale higher in price, investor with enough risk appetite and longer term horizon can consider investing in the commodity (silver) in small parts. Also here it can be pointed out that silver shares negative correlation to rupee depreciation, implying that when rupee falls there is a surge in silver prices, and this rupee depreciation being a routine phenomena can be capitalized for gains from silver.