One of the fallouts of the Jas-
mine Revolution in the Middle
East and the crisis triggered by the recent earthquake and tsunami
in Japan is the steady rise in silver prices. If the Jasmine Revolution set off
the sharp ascent in silver prices, the anticipated demand from the
disaster-hit Japan, especially from its
electronics industry, has buoyed up the interest
in the white metal. With electronics industry accounting for more than 75%
of industrial use of silver, Japan, a hub for electronic products, is expected to
resort to aggressive buying of silver to increase its production in an effort to offset
the setback caused by the natural disasters. Unsurprisingly, silver is
predicted to do well and even touch Rs 1 lakh a kg in the next couple of years.
Reflecting the growing interest among investors, in February-March this
year, the domestic prices of silver shot up from Rs 43,080 a kg to Rs
55,820—a rise of Rs 12,740 or 29.57% (see
Table). During the same period, global prices of silver went up by 38%, and silver
was trading at $37.33 an ounce. In fact, in the said period, silver
outperformed gold which returned only 8%.
Consider this: between January and March 2011, the average daily
volumes in silver on the Multi-Commodity Exchange (MCX) rose sharply from
Rs 12,245.14 cr to Rs 16,832.09 cr. While domestic silver prices returned
28.52% in the last three months, 67.78% in six months, and a whopping 176.55%
in two years, the Sensex returned negative in the last six months and could
muster only 86% in the last two years.
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