
Silver breaking out above Rs 1 lakh is an opportunity for investors. Here’s why
strong upside potential for silver at the beginning of March, and since then, the price of future contracts has risen by 6.6%.
As mentioned in the previous article, one of the major data points supporting silver’s upside potential is the Silver-to-Gold ratio. Excluding the COVID-period decline, the current ratio of 1.09% is near a 30-year low. Gold, which has moved up phenomenally, has also paved the way for silver to gain momentum, as it closely follows in the precious metals category.
Now there is yet another reason to focus on silver… It has formed a new all-time high and even crossed the psychological mark of Rs 1 Lakh. On analysing historical returns of silver after it crosses the previous high, we find that average forward returns are positive across different periods, with 12-month forward returns providing the highest average return and strike rate. The returns are tabulated below:
MCX Ahmedabad Silver Spot Price (Rs.)
Previous High
(Rs.)
3m Forward Return
6m Forward Return
12m Forward Return
18-Nov-05
12,250
12,034
11.84%
63.67%
54.98%
03-Mar-06
14,600
14,575
25.46%
21-Feb-08
22,238
22,178
9.66%
-8.22%
4.33%
14-Jul-08
25,500
25,350
-27.42%
16-Sep-09
26,785
26,229
2.11%
0.35%
20.40%
12-May-10
29,810
29,440
-3.22%
35.39%
26-Aug-10
30,180
29,940
37.85%
17-Sep-10
32,340
32,250
95.58%
19-Nov-10
41,167
40,925
30.31%
01-Dec-10
43,320
42,050
15.48%
03-Mar-11
50,915
50,025
3.88%
07-Aug-20
73,755
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