The Hindu Business Line : Silver delivers higher returns than gold

Spot gold prices in the last six months have moved up 12 per cent to Rs 15,965/10 gm in October, while silver has jumped 24 per cent to Rs 25,999 a kg in the same period.

Similarly, in the last one year, gold has given a return of 35 per cent while silver delivered 54 per cent to investors.

In the three months ended October, silver registered a gain of 16 per cent while gold gave a return of eight per cent.

Consumption pattern

Silver has significant industrial demand unlike gold which depends mainly on jewellery and investments that had turned weak after the recent global economic meltdown, said Mr G. Harish, Vice-President (Research), JRG Wealth Management.

Besides, silver had fallen sharply compared to gold during the last year, he added.

Gold prices in the international markets dipped 30 per cent to $681 an ounce in October last from $986 an ounce in July last. In the same period, silver plunged 56 per cent.

Gold prices in the international markets track the dollar movement against the euro and react to inflationary concerns, but silver relies on the demand-supply equation, said Mr Sushil Sinha, Head of Sales, Karvy Commodities.

In India, gold prices are of late reflecting the international prices after adjusting for rupee value against the dollar.

In fact, in the last few months gold prices have not risen as much as they had in the international market, mainly due to the dollar trading weak against the rupee, he added.

Though silver has delivered better returns than gold, there are few options for retail investors to tap the benefits.

As far as gold is concerned, retail investors can invest as low as Rs 10 a month through post office’s Gold Pass Book scheme.

Post offices also sell gold coins of 0.5 grams to eight grams. Gold exchange traded funds (ETF) operated by mutual fund houses are also available.

Few retail avenues

However, when it comes to silver, investors have to either buy from the spot market or take position in the commodity futures market. Online commodity exchanges offer silver in five kg, 30 kg and 100 kg lots.

“Silver ETFs, which are quite popular in the international markets, are yet to take off in India. Investor interest in silver will grow once we have more avenues,” said an analyst.

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