Equities have lost a bit of their sheen recently, as the markets have been range-bound for quite some time. Many retail investors seem to have been attracted by gold, with the old wisdom that gold is the best investment once again holding sway.
In fact, some are now shifting to silver, following its meteoric rise even ahead of gold, doing the exact opposite of what the most successful investment sutra stipulates: buy low, sell high. But let's dig a little deeper and see if there is any fundamental reason that will further fuel this rally in precious metals. In the case of silver, global production increased by more than 120mn ounces in the past six years.
But, industrial demand increased by only 100mn ounces, while the demand from the photography segment actually declined by 100mn ounces due to digitalisation. Hence, there has been no increase in net genuine demand at all for silver! So, where did all those 120mn ounces of extra silver go? The large chunk has been absorbed by investors, with no reference to real-world demand-supply dynamics!
Source: http://articles.economictimes.indiatimes.com
Neeraj Rajgarhia
Summer Intern - Technical Analyst
DENIP Consultants Pvt. Ltd.
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