Monday, January 10, 2011

Demand For Silver Ramping Up In India

That says something about the price of gold right now. According to a Bloomberg report, last year's six-fold increase in silver imports shows a leap in demand that will continue this year.
“It is increasing day by day,” Ketan Shroff, managing director of Pushpak Bullions Pvt., said in a phone interview from Mumbai. Demand probably climbed at least 20 percent to 30 percent in the past six months, he said....

“People are accumulating silver since gold is getting unaffordable to the common man,” Shroff said in an interview on Jan. 7. Silver “has become the common man’s gold.”

An old market maxim says that the third, manic stage of the gold bull market marks the time when silver outperforms gold by a large margin. Since both are monetary metals, they tend to be influenced by the same inflationary forces. Gold, though, gets the bulk of the investment demand at first.

Then comes silver, for the reason spelled out in the above article. During the third stage, gold becomes too expensive for an increasing number of people. Traders wind up filling the gap for gold, while more and more physical buyers increasingly push up silver.

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