After all, what is happening with silver? This question is in the mind of every investor nowadays, because its prices are not showing any signs of decreasing. In just one month, silver prices have increased by Rs 1 lakh, and in the last week alone, they have increased by nearly Rs 40,000. Meanwhile, investors are suffering huge losses in the stock market. On Friday, silver prices touched near Rs 3.40 lakh on the Multi Commodity Exchange (MCX), although it later closed at Rs 3.34 lakh. Meanwhile, silver has also hit a record high in the international market, crossing the $100 per ounce mark for the first time. Due to rapid fluctuations, investors are also cautious about investing in silver.
Silver at record high due to speculation and hedging demand
Experts say that silver has crossed this historic level due to investors turning towards precious metals amid geopolitical tensions and increasing concerns about global financial stability. Spot silver prices rose more than 4% in a single session, hitting a new all-time high of $100 an ounce. March futures silver prices also rose nearly 4%, settling at $100.06 on strong speculative and hedging demand.
What does betting on silver mean?
Before understanding why betting on silver has increased, it is important to understand what betting on silver means. Basically, when huge bets are placed on something due to news or expectations, it comes under the category of betting. Similarly, due to the talk of duty exemption on silver in the budget, high price targets for silver by experts and industrial demand, a lot of bets are being placed on silver in the commodity market, or in other words, speculations in silver have increased rapidly.
Why is betting on silver increasing?
Commodity market experts say the “dual character” of silver is making it attractive for speculators. Silver is not only a precious metal, but it is also known as an important industrial metal. Its demand is continuously increasing in solar panels, electric vehicles (EVs), semiconductor, 5G technology and electronics sectors. This is the reason why investors are rapidly creating positions in silver in the hope of higher returns.
Low liquidity, high volatility
The silver market is much smaller than the gold market. Experts say that even a small purchase or sale can cause significant fluctuations in prices. Money is coming in rapidly in silver through F&O (Futures and Options) trading in MCX and international markets. Retail investors are also actively participating. Low margin trading, coupled with bullish speculation on social media and YouTube, is attracting small investors into silver.
increased hedging demand
Speculation isn’t the only factor driving silver prices up; Hedging demand is also giving support. Global geopolitical uncertainty has increased. The Russia-Ukraine war, tensions in the Middle East, the US-China trade dispute, and the economic slowdown in Europe have forced investors to look for safe-haven assets. While central banks primarily buy gold, hedge funds, family offices, and large institutional investors are also adding silver to their portfolios.
Companies in solar energy, electric vehicle and electronics sectors are also worried about the future prices of silver. They fear that prices may increase further. Therefore, these companies are buying silver already to avoid buying at higher prices in the future. This is also a reason why silver prices are increasing rapidly.
What will happen next for silver?
Experts believe that the current price level of silver is bullish, but also risky. If industrial demand remains strong and gold prices remain stable, further upside in silver is possible. However, if the global economy faces a deep crisis or a risk-averse environment develops, prices are likely to fall sharply. According to experts, investors can consider investing in silver for the long term with limited allocation.