Gold glitters, but silver shines brighter

By M H Ahssan

Silver Gives 28% Return Vs Gold’s 17% This Year; It May Continue To Outperform Gold

Everyone’s talking about gold and its glitter but check the returns silver has delivered this year. After falling around 10% in 2008, silver has outperformed its much hallowed yellow counterpart. Based on Saturday’s closing in the Mumbai bullion market, ready silver (.999) at Rs 23,230 per kg has given returns of 28% this year. In comparison, gold (99.5 purity) has returned 17%. Analysts say silver has the potential to outperform gold in future too and investors should keep their eyes open while parking their money in the precious metals space.

While silver fluctuated in the wide range of Rs 16,400 to Rs 27,000 in 2008, and finally ended the year 2008 at levels which were around 10 % lower than in 2007, gold has had an unprecedented bull run and finished 2008 with over 20% returns.

This at times when stock markets were down, enhanced the proposition of gold for investors, say market experts.

But commodity gurus like Jim Rogers have been betting on silver for sometime. He has recently announced that if pushed to choose between the two precious metals, the Singaporebased investor would choose silver.

When HNN contacted him on silver’s fortunes, the man who was one of the first to call the commodities boom right said, “I own it.”

People like him, who own silver in India have seen silver rise from Rs 18,100 per kilo (on December 31, 2008) to Rs 23,320 in close to 50 days in Mumbai bullion market. This is no different from what has happened in other bullion markets like those at Delhi, Chennai, Hyderabad, Indore and Kolkata. Gold, which started the year at which Rs 13,435/gm, closed at Rs 15,745/gm on Saturday-giving close to 17% returns in the same period.

Though people may be obsessed with tracking gold prices, precious metal experts believe that silver has the potential to outperform gold in future also. Like gold made all-time high the past week, silver too climbed to a five-month high.

“If one has Rs 100 to invest in precious metals, he/she could invest Rs 60 in silver and the rest (Rs 40) in gold. It’s a good investment option,” Mandar Pote, who tracks bullion at Angel Commodities said.

At commodity exchanges such as NCDEX and MCX, silver has been the top gainer amongst commodities with 9-10% gain this week while gold was the second best giving returns of 7-8%, data shows.

According to investment advisory firm SMC Global, silver contracts for March delivery at MCX are showing an uptrend while the weekly stock position shows rise of 3,649 kilograms for the week ended February 19.