Silver shines again, hints at industrial revival

Nagpur: The price of per kg silver has surpassed that of per tola (10 grams) of gold. Prior to the lockdown, a kg of silver was priced less than a tola of gold. Last month, prices of both the precious metals had come neck and neck.
On Friday, silver was quoted at Rs52,300 a kg and gold was Rs50,200 a tola. Traders say this is an indication that industrial activity is picking up. Apart from ornamental or investment purposes, silver is also an industrial input, and goes into making products like electronics.
As business was down due to lockdowns globally, silver remained subdued. However, sources say, now even investment buying is seen to a certain extent in this metal. Apart from gold, which has been the traditional safe haven asset, money is expected to be flowing into silver too.
The trade follows the gold-silver ratio as a thumb-rule. Traditionally, it has been at 1:50, which means one kg of gold could buy 50kg of silver.
In March 2020, the ratio had touched 1:126. This means silver prices had slid and a kg of gold could fetch as much as 126kg of silver. By last month, the ratio touched 1:100, which was again attributed to industries starting again.
Now, as gold rates have surged, silver too has caught pace, taking the ratio to 1:96, which is a further improvement.
Pankaj Bakhai of M/s Anantrai and Sons at Itwari Sarafa Oli — the traditional jewellery market — said from April 2018 to March 2019, gold-silver ratio had remained 1:81. At present it is 1:96.
Bakhai admitted that the change from 1:126 in March this year to 1:96 now shows that the demand of silver has gone up. “Although the rates are governed by global market, locally too there have been some inquiries about buying silver. It’s both for investment or buying silverware,” said Bakhai.
Nitin Khandelwal, former president of Gold and Jewellery Council, said silver is up because of both — gradual increase in industrial activity across the world and investment buying. However, not much activity is seen at the local level because of restrictions on account of lockdown.
Vinod Haygriv, managing director of Krishna Chetty Group of Jewellers, said, “The industrial activity has picked up. There is no lockdown in Singapore, many parts in America are coming back to normalcy. This can lead to an industrial demand. At the same time, supply remains affected as it may still take some months for the mines to begin operations again.”
On investment buying, he said there may be a section of investors who are bullish on silver hoping that it may reach a peak Rs70,000 again. Silver had touched the peak in 2011.