8/7/2019 dikshit

1/66

Is the silver the new

gold?

For many years consumers and investors have

favoured gold, but persistently high prices mean thetime has come for silver to reassert its credentials as a

jewellery material and a store of value.

Signs that the economic downturn may at last bereaching a floor are also expected to help silver to pick

up the momentum it needs to outperform gold.

The debate about the relative merits of gold and silverhas been triggered by news the world's largestconsumer,

8/7/2019 dikshit

2/66

India, for the second month running in March did not

import any gold, and may even have become an

exporter.

"In

India you have people who can only afford silverand people who will only buy gold, but there are a

large number of people in the middle who will rotate

from gold to silver," said Ashok Shah, chief investmentofficer at London & Capital. That phenomenon is likely

to be repeated in other countries as unemployment,

salary cuts and potential tax rises take their toll onconsumer spending, analysts said.

Gold used as a hedge against financial uncertainty, flewthrough $1,000 an ounce to an 11-month high on

February 20 at the height of the banking crisis.

Prices have tumbled about 13pc to around $875 an

ounce since then, while silver has fallen 16pc to about$12.20 an ounce from a six-month $14.60 peak in

February.

"Silver over the last 30 years has been the poor cousin.In the first half of the last century gold and silver was

on a similar footing in terms of monetary value andtheir roles as safe havens," said Eugene Weinberg, an

analyst at Commerzbank.

A measure of value is the ratio of gold to silver prices,

which in the last century fell as low as 14 andcompares with levels around 70 now suggesting gold

is overvalued.

8/7/2019 dikshit

3/66

He added: "The ratio could drop to between 40 and 50

in the medium term," Weinberg said. "People who

cannot afford to buy gold for jewellery will buy silver."

Since the early 1980s the ratio has averaged about 65and mostly ranged between 30 and 100.

Figures around 100 were last seen in early 1991 afterIraq's invasion of Kuwait fuelled security concerns anda surge in oil prices raised the spectre of rampant

inflation, boosting gold's allure as a hedge againstfinancial uncertainty.

Worries about price pressures in the pipeline becauseof the large amounts of money being pumped into the

economy by central banks and governments are

expected to support prices of both metals over the nextfew years.

But in the short term silver and gold prices could slip as

investors switch back to riskier assets such as equities

on expectations of stronger growth and industrial

output.

If a real uptick in growth does materialize, silver willremain relatively unscathed as it is used in industries

such as electronics, aerospace and defence.

"Gold will suffer ... Silver will too, but this impact may

be relatively muted by the recovery in industrial

demand," said David Thurtell, an analyst at

Citigroup."We would suggest that the gold/silver ratio

8/7/2019 dikshit

4/66

will push down towards the 50-55 level by the end of

third quarter."

Industrial demand for silver, including from the

photography industry, is reckoned to be about 65 percent of total global supplies estimated at 895 tonnes.

For gold industrial and dental demand the figure is

about 11 per cent of supplies estimated at around3,880 tonnes, according to consultants GFMS.

Part of the boost for silver will come from investmentdemand. With gold prices still near $900 an ounceholdings of exchange traded silver funds are expected

to rise.

The I Shares Silver Trust, the largest silver-backed

exchange traded fund listed in New York, holds arecord 8,413 tonnes, a gain of more than 20 per cent

since early January.

That compares with a more than 40 per cent rise in the

SPDR Gold Trust, the world's largest gold-backed

exchange traded fund, with holdings near record highsof 1,127 tonnes.

"Some people may be slightly more positive on silver to

outperform gold on strong investment demands," saidAdrian Koh, an analyst at Phillip Futures.

8/7/2019 dikshit

5/66

Gold prices against silver:

[1995-2010]

8/7/2019 dikshit

6/66

8/7/2019 dikshit

7/66

8/7/2019 dikshit

8/66

8/7/2019 dikshit

9/66

8/7/2019 dikshit

10/66

8/7/2019 dikshit

11/66

8/7/2019 dikshit

12/66

8/7/2019 dikshit

13/66

8/7/2019 dikshit

14/66

8/7/2019 dikshit

15/66

8/7/2019 dikshit

16/66

8/7/2019 dikshit

17/66

8/7/2019 dikshit

18/66

8/7/2019 dikshit

19/66

8/7/2019 dikshit

20/66

8/7/2019 dikshit

21/66

8/7/2019 dikshit

22/66

8/7/2019 dikshit

23/66

8/7/2019 dikshit

24/66

8/7/2019 dikshit

25/66

8/7/2019 dikshit

26/66

8/7/2019 dikshit

27/66

8/7/2019 dikshit

28/66

8/7/2019 dikshit

29/66

8/7/2019 dikshit

30/66

8/7/2019 dikshit

31/66

8/7/2019 dikshit

32/66

8/7/2019 dikshit

33/66

8/7/2019 dikshit

34/66

8/7/2019 dikshit

35/66

8/7/2019 dikshit

36/66

8/7/2019 dikshit

37/66

8/7/2019 dikshit

38/66

8/7/2019 dikshit

39/66

8/7/2019 dikshit

40/66

8/7/2019 dikshit

41/66

8/7/2019 dikshit

42/66

8/7/2019 dikshit

43/66

8/7/2019 dikshit

44/66

8/7/2019 dikshit

45/66

8/7/2019 dikshit

46/66

8/7/2019 dikshit

47/66

8/7/2019 dikshit

48/66

8/7/2019 dikshit

49/66

8/7/2019 dikshit

50/66

8/7/2019 dikshit

51/66

8/7/2019 dikshit

52/66

8/7/2019 dikshit

53/66

8/7/2019 dikshit

54/66

8/7/2019 dikshit

55/66

8/7/2019 dikshit

56/66

8/7/2019 dikshit

57/66

8/7/2019 dikshit

58/66

8/7/2019 dikshit

59/66

8/7/2019 dikshit

60/66

8/7/2019 dikshit

61/66

8/7/2019 dikshit

62/66

8/7/2019 dikshit

63/66

8/7/2019 dikshit

64/66

8/7/2019 dikshit

65/66

8/7/2019 dikshit

66/66

So Why is Silver the New Gold?

There is less silver in the world for investors today than gold. In the

western world we take silver for granted, we are befuddled to believe

that silver is common and easy to obtain. In many regions of theglobe, finding investment grade silver can be next to impossible.

Many of our Asian-Pacific customers have expressed to us that they

have no trouble buying gold bullion in their countries, but finding

investment grade silver is next to impossible.

Silver cannot be substituted; it has too many unique properties.

Nothing conducts electricity or heat as well as silver. No metal is a

better reflector of light. Silver is integral in the photographic process

and has important health benefits. The white metal is an absolute

necessity in high tech as every server, cell phone, monitor, computer,

and electric switch. It's in your TV, washing machine, refrigerator,

batteries, DVD's, iPod, wall switches, and mirrors. Without silver our

modern way of life is impossible!