It has given a return of 24 per cent in last one year compared to gold's 16 per cent.
Silver has far surpassed gold as the most preferred investment option in the recent past. In the last one year, silver has given a return of 24 per cent compared to the yellow metal, which gave a 16 per cent return during the period.
On Friday, silver prices rose by Rs 107 to Rs 26,525 per kg in futures trade on fresh buying, in tandem with firming global trend indicating that investors expect the prices to go up further.
At the Multi Commodity Exchange (MCX), silver for July delivery rose by Rs 107, or 0.41 per cent, to Rs 26,525 per kg with an open interest of 1,346 lots. Similarly, May silver gained Rs 98, or 0.37 per cent to Rs 26,320 per kg in 14,945 lots.
Fresh buying activity after reports of firming trend in overseas markets helped silver prices to improve at the futures market.
Prashant Sarawgi, brand director, Episode, a company which specialises in silver jewellery, said, "Silver has been giving consistent returns for the last five years, which has also led to an increase in the demand for silver commodities."
"Silver offers a minimum return of 20 to 22 per cent as compared to gold. Also, the price of silver is quoted per kg while that of gold is per ten grams. Even if you wish to buy a decent gift in gold it would cost you anywhere between Rs 20,000 and Rs 25,000, while the same in silver could be bought for Rs 4,000 to 5,000," he said.
Sarawgi also pointed out that in the coming days, the demand for silver would continue to rise, in turn, giving consistent returns. "Silver products in India are not marketed well and hence many don't know about the returns that they offer," he said.
Suresh Hundia, president of the Bombay Bullion Association, added that while the demand for silver has gone up, it would increase further if a Silver Exchange Traded Fund (ETF) were to be launched.
"Mutual fund companies are not too enthusiastic about launching an ETF for silver as in the case of gold. People would love to invest in silver ETF and get good returns without having to hold on to it physically," Hundia added.
An ETF holds assets such as stocks, bonds or commodities and trades at approximately the same price as the net asset value (NAV) of its underlying assets over the course of the trading day.
Hundia also explained that Indians don't prefer to wear silver jewellery and buy it only as artifacts.
"The demand for gold increases when the prices come down.
During Diwali last year, the prices were at around Rs 15,800 levels.
Then the demand went up. Soon the prices zoomed to Rs 18,300 levels but subsequently the demand came down. In the month of December, when the price corrected to Rs 16,200 levels, imports also went up," he said.
A report published by the World Gold Council (WGC), a body funded by global miners, showed India's total import of gold in 2009 stood at 459 tonnes, the lowest since 1997. This was the first time in 13 years that India's annual gold imports fell below 500 tonnes indicating the lack of demand for the yellow metal due to its high prices.
At MCX, silver for July delivery rose by Rs 107, or 0.41 per cent, to Rs 26,525 per kg with an open interest of 1,346 lots.
Silver offers a minimum return of 20 to 22 per cent as compared to gold.
Silver has now become a more affordable option for gifts.
Experts feel, in the coming days, the demand for silver would continue to rise, in turn, giving consistent returns.