The Hindu Business Line : Silver holds more promise than gold

Silver and gold have been two of the most prominent performers on the commodity market. While gold is seen as an asset against inflation and global terrorism, silver is now seen as a metal that holds more promise than gold.

Reasons for this are many. The first reason is that exports from Mexico, which accounts for 50 per cent of global exports, are down. This is because the Latin American nation is trying to strengthen its currency, peso, against the dollar through the back of the precious metal. "This is one of the reasons for the prices to rise," says Mr Kushal Thaker of Commodities Investment and Strategy.

The second is that silver is now being used in power grids in Europe as replacement for copper. Due to variations in power supply, the copper wires snap. Silver wires do not snap easily as they are ductile. Therefore, silver is being replaced in power grids. "Many are not aware that the first rise in silver is because of the demand from the energy sector," says Mr Thaker.

Silver is also being used by the pharmaceutical sector. It is being used in nano injectibles and is proving to be a wonder drug. Photography is another sector where a demand for silver is being witnessed. Though China is witnessing a growth in digital photography, analysts say that there is still demand for glossy artwork. This requires silver and therefore, the photography sector still witnessed demand.

Going by the current scenario, silver may not fall below $9 an ounce or Rs 15,000 a kg. On the upside, it could touch $21 or Rs 30,000 a kg. "But volatility in the near term could be high in view of the economical changes that we may witness," say analysts.