New Delhi: Unrest in the Arab world has been rocking Indian stocks, taking the bottom out of key indices, but it has also led to the prices of silver, of which the country is the largest importer, soaring to an all-time high.
"Silver prices have sky rocketed as much as 240 percent in the past four years. It is at an all-time high of Rs 49,955 per kg. It can breach the Rs 50,000-mark any day," said Pawan Verma who runs one of the largest jewellery stores in the capital's old quarters.
"One of the key factors right now is the international buying spree, which is also partly based out of China. Both gold and silver are seeing enormous demand. Then there is this Gulf unrest. All are only fuelling prices, not pulling down demand," Verma told IANS.
The precious white metal cost around Rs 8,000 a kg in 2008 and shot up to Rs 27,500 a kg a year ago. Now at the current prices it has virtually doubled in the past 52 weeks, according to data available with the various bullion exchanges.
Compared with this, gold prices have appreciated 150 percent in the last five years and around 25 percent over the past 52 weeks. The yellow metal is also ruling at an all-time high of Rs 21,065 ($467) per 10 grams in Mumbai.
According to precious metal analysts, the trend of silver price appreciation is not new. There are apprehensions over the remaining silver reserves in the world and the current global financial instability is fuelling demand and prices.
"There are a number of factors," said Kalpana Jain, senior director at global consulting major Deloitte, explaining the recent surge in silver prices.
"The robust international demand, worries over reserves and financial instability are propping prices up," she said.
Jain told IANS that silver is also emerging as a good investment option due to the constant appreciation in prices. "The instability in the Gulf and its impact on crude oil have also made silver a key hedge investment - like gold in the past."
Although comprehensive data is not available, another interesting trend in India is the emergence of a systematic investment plan (SIP) for silver on the lines of gold, which calls for periodic investment in a particular fund for long-term gains.
Looking ahead, analysts expect India's silver imports to go up further during this year, after they jumped 25 percent last year to top 1,200 tonnes.
But all eyes are also on the upcoming federal budget to be presented by Finance Minister Pranab Mukherjee on Monday. Another hike in import duty on silver, which has tripled in the past two years from Rs 500 per kg in 2009 to Rs 1,500 in 2010, could dampen demand.
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