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At present, big news is coming out from the Indian bullion market and global commodity markets which is raising lines of worry on the forehead of investors. The white metal i.e. Silver, which once made investors rich with its shine and huge returns, has completely wiped out half of the investors’ savings. Slipping from its previous record breaking high (All-Time High) i.e. peak price, the prices of silver have fallen by almost 50% till now, due to which there is an outcry in the market. Investors who had invested huge amounts of money in silver at higher levels are in shock after this huge fall as to what happened suddenly that the white metal became like this within a few months. Commodity market experts say that this historic correction has been seen in silver prices due to changing equations on the global economic front, strength in the dollar index and slowdown in industrial demand. Let us know in detail today why silver prices have halved and whether there is still any strength left in the silver market after this current fall or should investors stay away from it.
According to global and domestic commodity market analysts, many major geopolitical and economic factors are responsible for this huge fall in silver prices. Some time ago, when there were expectations of a huge rise in the international market due to industrial demand and silver consumption in solar panels, electric vehicles (EV) and electronics sectors, investors and big speculators had indiscriminately poured money into it, due to which the prices started touching the sky. But after this, as soon as central banks around the world indicated that they would keep interest rates high for a long time and the US dollar regained strength, money started flowing out of the bullion market rapidly. Apart from this, due to profit booking by investors and cutting of long positions in the commodity futures market, silver started falling and in no time it fell to almost half of its highest level.
Amidst this huge recession in the market, the biggest question is whether investors should take advantage of this decline and buy on dips in silver or should wait for more. Commodity experts believe that since silver is not just a precious jewelery or safe haven investment, it is also a vital raw material for industries across the world, hence its long-term fundamental demand remains strong. Silver demand from the green energy transition, solar energy projects, and semiconductor industries could pick up pace again in the coming years. However, from a short-term perspective, there may still be a lot of volatility and volatility in the market. For investors who want to invest for a long term (3 to 5 years or more), this can be a great opportunity to buy in chunks (through SIP), but it is important to do a thorough risk assessment before investing a large lump sum.
Bullion traders and financial advisors advise investors not to sell silver or gold from their portfolio at throwaway prices due to market panic. The golden rule of investing says that you should never invest your entire capital in a single asset class. It is considered prudent to keep only 10 to 15 percent of your total portfolio in precious metals. In the coming months, global inflation data, US Federal Reserve’s interest rate decisions and industrial sector data will decide how soon silver manages to regain its lost shine. If you are also planning to invest in the market, then make the right strategy only after taking advice from a certified financial advisor.