Demand for silver soars as rising prices lure investors
KATHMANDU, APR 23 -
The trend of buying silver as an investment has increased significantly in the local market with prices rising daily. According to bullion traders, demand has more than doubled to around 250 kg a day.
In the last one week, silver increased Rs 95 per 10 gm to reach a 31-year high. Its price in the international market rose more than US$ 5 to US$ 45 per ounce.
Traders said that daily demand for silver, which amounted to 100 kg till two weeks ago, had surged to 200-250 kg with buyers choosing it as an investment while previously its use was limited to making jewellery and handicraft.
Tej Ratna Shakya, president of the Nepal Gold and Silver Dealers Association, said that people had started to buy silver as a safe investment. "We have seen people buying 50 tolas to 2 kg of silver in local market because of speculation that its price would rise further."
Silver was traded at Rs 1,102 per 10 gm (Rs 1,285 per tola) in the domestic market on Friday to set a new record. Gold too has become dearer with its price touching an all-time high of Rs 35,710 per 10 gm (Rs 35,652 per tola). Last Friday, silver and gold traded at Rs 1,007 and Rs 35,235 respectively. Gold and silver prices have been soaring in the international market in recent weeks because of worries about the sustainability of European debt levels, a weaker dollar, rising inflation in many parts of the world, continued unrest in North Africa and the Middle East pushing up oil prices, concern over the US budget and the earthquake and tsunami in Japan last month.
Local bullion traders said that demand for silver had increased massively in the international market for industrial use. They said that investors in the international market expected demand would increase further pushing up prices. "There is a normal assumption among the general people that prices will increase further," said Suman Shakya, a retailer of gold and silver. He added that even though the government has allowed traders to import silver under the open general license provision (OGL), the domestic market had already started to see a shortage of the metal.
Earlier in January, silver imports had soared immediately after the government implemented the OGL provision. Shakya said that demand for silver had increased, however, wholesalers were sending the retailers back empty-handed. "It looks like even big traders are holding on to their stocks to take advantage of possible price hikes," he added.
A wholesaler who asked not to be identified said, "Demand has increased as silver is becoming dearer each day attracting better returns than the minimum interest rate of banks." Silver and gold prices have soared 145 percent and 30 percent respectively from Rs 450 and Rs 27,450 per 10 gm last year. NEGOSIDA president Shakya said that the trend of making investments based on speculation was not good. "Even though there is no sign of the price of silver coming down shortly, prices may plunge if clearance sales were to be held somewhere."
In 1980, the price of silver in the international market increased to around US$ 50 per ounce from US$ 6 within four months after the Hunt brothers bought the metal aggressively for seven years, at one time owning more than 200 million ounces or equivalent to nearly half the world’s deliverable supply. Later, following government intervention in the commodity market, the price dropped to US$ 11 within eight short weeks.
Day Silver per 10 gm
April 22 Rs 1,102
April 21 Rs 1,084.50
April 20 Rs 1,046
April 19 Rs 1,024.50
April 18 Rs 1,024.50
April 17 Rs 1,020
April 15 Rs 1,007
Source: NEGOSIDA
The trend of buying silver as an investment has increased significantly in the local market with prices rising daily. According to bullion traders, demand has more than doubled to around 250 kg a day.
In the last one week, silver increased Rs 95 per 10 gm to reach a 31-year high. Its price in the international market rose more than US$ 5 to US$ 45 per ounce.
Traders said that daily demand for silver, which amounted to 100 kg till two weeks ago, had surged to 200-250 kg with buyers choosing it as an investment while previously its use was limited to making jewellery and handicraft.
Tej Ratna Shakya, president of the Nepal Gold and Silver Dealers Association, said that people had started to buy silver as a safe investment. "We have seen people buying 50 tolas to 2 kg of silver in local market because of speculation that its price would rise further."
Silver was traded at Rs 1,102 per 10 gm (Rs 1,285 per tola) in the domestic market on Friday to set a new record. Gold too has become dearer with its price touching an all-time high of Rs 35,710 per 10 gm (Rs 35,652 per tola). Last Friday, silver and gold traded at Rs 1,007 and Rs 35,235 respectively. Gold and silver prices have been soaring in the international market in recent weeks because of worries about the sustainability of European debt levels, a weaker dollar, rising inflation in many parts of the world, continued unrest in North Africa and the Middle East pushing up oil prices, concern over the US budget and the earthquake and tsunami in Japan last month.
Local bullion traders said that demand for silver had increased massively in the international market for industrial use. They said that investors in the international market expected demand would increase further pushing up prices. "There is a normal assumption among the general people that prices will increase further," said Suman Shakya, a retailer of gold and silver. He added that even though the government has allowed traders to import silver under the open general license provision (OGL), the domestic market had already started to see a shortage of the metal.
Earlier in January, silver imports had soared immediately after the government implemented the OGL provision. Shakya said that demand for silver had increased, however, wholesalers were sending the retailers back empty-handed. "It looks like even big traders are holding on to their stocks to take advantage of possible price hikes," he added.
A wholesaler who asked not to be identified said, "Demand has increased as silver is becoming dearer each day attracting better returns than the minimum interest rate of banks." Silver and gold prices have soared 145 percent and 30 percent respectively from Rs 450 and Rs 27,450 per 10 gm last year. NEGOSIDA president Shakya said that the trend of making investments based on speculation was not good. "Even though there is no sign of the price of silver coming down shortly, prices may plunge if clearance sales were to be held somewhere."
In 1980, the price of silver in the international market increased to around US$ 50 per ounce from US$ 6 within four months after the Hunt brothers bought the metal aggressively for seven years, at one time owning more than 200 million ounces or equivalent to nearly half the world’s deliverable supply. Later, following government intervention in the commodity market, the price dropped to US$ 11 within eight short weeks.
Day Silver per 10 gm
April 22 Rs 1,102
April 21 Rs 1,084.50
April 20 Rs 1,046
April 19 Rs 1,024.50
April 18 Rs 1,024.50
April 17 Rs 1,020
April 15 Rs 1,007
Source: NEGOSIDA
