Silver prices have outperformed gold in the past fortnight. Silver in India is trading at Rs 52,500 per kilogram, the highest in seven years, while the global prices are at a ten-month high. The coronavirus pandemic and the consequent lockdown have impacted silver mining leading to a decline in supplies.

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Silver prices are up 18 percent in the last three months, up 36 percent in the past one year. The prices have rebounded 55 percent from March lows, when the price hit its lowest level in 11 years.

The metal prices are surging on the back of safe haven buying and also because of its use in industrial applications.

The daily turnover of silver futures on the MCX is at its highest since 2013. The iShare Silver Trust assets are at record high at 116,043 tons.

Industrial applications

Emerging industrial applications, such as in renewable energy, solar chips, cables, where silver is in high demand will push its prices up. It is estimated that 888 million ounce of silver would be in demand between now and 2030.

Supply and demand

The Silver Institute expects silver mine production in 2020 to decline by 5 percent to 978.1 million ounces. The Industrial demand is expected to decline 7 percent but physical investment is expected to surge 16 percent. The surplus supply is expected to decline by 53 percent. The global silver supply is expected to be at its lowest point this year since 2009.

The silver prices have the best of both worlds, it takes support as safe haven from gold gains and since 65 percent of silver applications are in industrial metals, it has that support too.

Analysts expect silver to trade at $20 to $22 an ounce in this rally if the uncertainty remains, while the Indian prices could surge to Rs 55,000-58,000 per kilogram.

First Published:Jul 13, 2020 7:27 PM IST