Silver Rally: Silverlining for investors, or classic demand-supply crunch, amplified by unique factors?

With Diwali and Dhanteras drawing closer and with silver shining brighter than ever, the question that’s doing the rounds is: Is it just a festive sparkle or there is something more to it? Are silver prices in the Indian market on a major upward streak?

- RITWIK MUKHERJEE

Interestingly, silver prices have continued their rapid upward momentum, surging well past Rs 170,000 in the physical Indian markets, with the fast-paced rally suggesting that prices could reach anywhere before Diwali. As retail investors rush to buy silver, spurred by the heavy rise in gold prices, silver appears relatively more affordable at Rs 170,000+ per kilogram, while gold is now trading at Rs 130,000 for 10 grams. If Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securitie, is to be believed, in the short term, silver faces resistance around Rs 100,000-Rs 101,000, with the next target of Rs 110,000 in view. Meanwhile, support for silver is seen in the Rs 96,000-Rs 96,500 range. With Diwali approaching and the sustained demand for precious metals, silver is expected to continue its robust performance, making it an attractive investment in the current market environment. Meanwhile, CA Arupa Dey Banik, economic and financial analyst, raised a much bigger question and explained why the price is soaring like this.

The silver rally is a classic “demand-supply crunch,” but amplified by a few unique factors: