Gold vs Silver purchase in Diwali: The prices of gold and silver have reached unprecedented levels recently. As Dhanteras approaches in just three days, individuals are deliberating on where to allocate their investments during this festive period. Gold holds significant cultural value in Indian tradition as a representation of affluence and success. Furthermore, this year, silver is emerging as a lucrative investment option and experts predict that it might surpass gold in the near future.
In the spot market recently, silver has reached a significant milestone of Rs 1,00,000 per kg. Currently trading at Rs 1,025 per 10 grams, silver serves a dual purpose as both a precious metal and an industrial commodity. The increasing demand for silver in industries such as electronics, renewable energy, and medicine is a key driver of its growth. Its use in solar panels, batteries, and other green technologies highlights its importance as a crucial resource in the shift towards clean energy.
Metal magnate Anil Agarwal, Chairman of Vedanta Group, took to X (formerly Twitter) to share his outlook on silver, where he highlighted silver’s transformation from a traditional precious metal to a crucial industrial resource, driven by new-age technologies.
“In India, prices have crossed Rs 1 lakh per kg! Demand has doubled from last year. Silver’s demand is being driven not just by its traditional uses but by massive industrial demand. It is now being used extensively in solar panels for renewable energy, in EVs, in advanced healthcare, electronics and many other technologies,” Agarwal said.
For silver, Agarwal said the combination of being precious and functional is rare and the demand supply gap is increasing. “It is the new critical mineral of the future,” he said.
He also highlighted the significant contribution of Hindustan Zinc, a Vedanta subsidiary, in the global silver market. The company produces silver through a 100% solar-powered refinery, ensuring a sustainable production process.
“At first, making silver was a challenge, but our engineers and technologists made it possible. Today, we are one of the largest producers of silver globally, and we aim to become number one,” he wrote on X on October 24.
A report by DSP Mutual Fund indicates that silver has shown better performance compared to other precious metals such as gold. With its essential role in modern technology, silver is extensively used in electronics, solar panels, batteries, and semiconductors. The increasing industrial demand for silver, along with anticipated rate cuts by the Federal Reserve, is driving up the market value of the metal.
What Motilal Oswal said
Brokerage Motilal Oswal on Saturday in a report noted silver could either match or outperform gold in the medium to long term. It expects silver to reach targets of Rs 1,25,000 on MCX and $40 on COMEX in the next 12 to 15 months. Recently, silver has shown impressive performance, gaining more than 40% YTD and breaching Rs 100,000 on the domestic front, fueled by safe-haven buying and robust industrial demand.
In the past five years, significant returns have been generated by both gold and silver. Gold futures have shown a return of 106.13%, while silver futures have slightly surpassed gold with a return of 116.63%.
Manav Modi, Analyst, Commodity Research, Motilal Oswal Financial Services, said: “The year 2024 has experienced a significant price rally fuelled by market uncertainties, expectations of rate cuts, rising demand, and a depreciating rupee. The months following the U.S. presidential election will be critical in shaping gold’s near-term trajectory. Hereon, the two key factors underpinning this year’s rally in precious metals are expectations of rate cuts from the Federal Reserve and rising geopolitical tensions, particularly in the Middle East. Overall, the sentiment for this Diwali is projected to be positive, raising optimism for bullion”.
On silver investment and outlook, Modi said the factors supporting silver prices, include rising industrial demand, high domestic imports, ETF buying by investors and Fed rate cuts have been supportive for silver.
Bhavesh Jain, co-head of Hybrid and Solutions Funds at Edelweiss Asset Management, said: “Silver has seen a strong long-term bullish break; the trend could likely continue supported by lower rates for longer and the revival in Chinese industrial activity.”