With its better surge in value compared to gold, silver holds promise for those planning long-term investments.
?Like gold, silver has outperformed almost every other commodity and equity indices globally during past decade. In last 10 years, silver has performed well to give CAGR returns of 19.9 per cent as per international quotes as equated to gold?s return of 16.8 per cent in the same period. The only difference is that silver, due to its volatile nature, has produced negative returns for two out of last 10 years whereas gold has been able to give positive return for each year in last decade,? said Tapan Trivedi, senior research analyst, Inditrade derivatives and commodities.
?Gold and silver, in both international and domestic markets, are seen as safe haven commodities though silver has very high dependence on industrial growth as well. Likewise, other key international commodities, such as the US dollar also acts as a key determinant for prices as gains/losses in the greenback inversely impacts metals price,? he elaborates.
About current trends, he said, ?Amongst the precious metals, both gold and silver usually follow a similar pattern in trade though silver, being a high-beta commodity, records mercurial movement in either direction. Over the past five months, bullion has largely remained in a range with spot silver ranging between $34 per ounce on the higher and $30 on the?lower side.
?In the domestic markets though, prices witnessed higher volatility which was infused by wide variations in the Indian Rupee. Silver prices are traded in a wide range between `65000-56000 per kilogramme levels for most active contract at the MCX Commodity Exchange. Year to date, both international spot as well Indian silver prices (MCX Apr Contract) have been weak with spot silver prices trading nearly at same levels as starting 2013 though Indian MCX prices dipped 2.2 per cent, backed by the appreciation in Indian rupee lately,?
On investing in silver, Tapan said, ?From purely an investment point of view, we feel international markets are currently trading at the lower end of the trading range near the $30 per ounce level. A break of this range could put further weight on prices in near term. In the Indian context, we feel prices could drop in near term and investors can get better investment opportunities towards `51,000-` 53,000 levels.
?Over the next few years though, investors can include silver as part of their portfolio as when global economy resumes its normal course, demand for silver would go up which can drive prices to `63,000-`65,000 levels. Silver and gold usually follow?similar trading pattern, though major advantage is with the fact that Silver has a higher beta and can generate higher returns if bought in the right cycle,? he adds.
Category: Business
Source: http://postnoon.com/2013/02/18/the-underestimated-sheen/109281
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