After a volatile year, can silver bring solid gains for investors in 2023?

New Delhi: Even as silver has had a volatile 2022, with the white metal seeing strong profit booking currently, it has managed to beat the yellow metal – gold.

However, silver is not merely a precious metal as it has some industrial value too. The low industrial demand due to the global slowdown and drastic jump in the dollar index as well as bond yields dented the prospects for silver.

The move in the precious metal confused many investors as despite being a safe haven, it did not materialise as expected by investors in a rising inflation environment.

The Russian-Ukraine war, increasing oil and gas prices and rising inflation followed by a series of interest rate hikes have further heightened global economic uncertainty.

Rahul Kalantri, VP-Commodities, Mehta Equities said that a stronger US dollar, and high inflation leading to higher interest rates pressurized industrial demand and outflows from silver ETFs dented the sentiments for the white metal.

Prithviraj Kothari, MD & CEO,

Bullions (RSBL) said it started the year around $23, went up to $27 in March and prices flipped to trade around $18 by end of August and now we are back trading above $23 in December.

In domestic markets, silver prices started the year around Rs 62,000, then touched Rs 73,000 in March, fell back to Rs 52,000 in August and now prices have rallied back above Rs 68,000 due to the rupee depreciation during the year.

The first quarter of 2022 was positively impacted by geopolitical tensions between Russia and Ukraine. The second and third quarters were negatively impacted by aggressive Fed rate hikes.

In the fourth quarter, silver saw strong demand from retailers and wholesalers during the Indian festive season.

Kalantri from Mehta Equities said that 2022 turned to be a great teacher for sound, sensible and long-term investors putting their money in silver.

He said that one should not discontinue their investments and focus on asset allocation for diversification and hold an adequate emergency fund.

Silver is a very volatile commodity, 10-15% swings can come in a month, said Kothari. “The best way to stay invested in silver is by buying digital silver via the SIP route,” he added.

Market participants remain optimistic on silver for the year 2023 and investors can expect handsome returns going forward if the industrial demand returns to normalcy.

(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)

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