The price rise in India for silver has been to the tune of 30%, under performing the global gains. Silver futures that began at Rs 10,334 per kilogram in January 2005, closed the year at Rs 13,006 for the near month contract (i.e. January 2005 and January 2006) on the National Commodities & Derivatives Exchange (NCDEX). Spot silver had hit a new all time high of Rs 13,365 on December 13.
The difference between the domestic and international prices of silver is expected to be about 5-8% in the year 2006. This is because though silver prices in India are determined by the global prices, as the country is a net importer of silver, high prices lead to increase in scrap supply, pressurising the prices in the country.
In a recent report, World Gold Council (WGC) stated that India, has started to offload its silver inventory although the sales have been sporadic with question marks over the purity of some of the material. Total identifiable stocks are estimated at 617 million ounces (19,190 tonnes) or 38 weeks supply.
However, the global prices are set to go upto as high as $ 11 an ounce. In the near term, prices are expected to correct the excessive moves seen in December. This could see a move back towards the $8.00/oz level, but after the correction, the market is expected to support ever higher prices which at times are likely to lead to further upside spikes.