Best of the Week
Most Popular
1. Market Decline Will Lead To Pension Collapse, USD Devaluation, And NWO - Raymond_Matison
2.Uber’s Nightmare Has Just Started - Stephen_McBride
3.Stock Market Crash Black Swan Event Set Up Sept 12th? - Brad_Gudgeon
4.GDow Stock Market Trend Forecast Update - Nadeem_Walayat
5.Gold Significant Correction Has Started - Clive_Maund
6.British Pound GBP vs Brexit Chaos Timeline - Nadeem_Walayat
7.Cameco Crash, Uranium Sector Won’t Catch a break - Richard_Mills
8.Recession 2020 Forecast : The New Risks & New Profits Of A Grand Experiment - Dan_Amerman
9.Gold When Global Insanity Prevails - Michael Ballanger
10.UK General Election Forecast 2019 - Betting Market Odds - Nadeem_Walayat
Last 7 days
Gold and Silver Capitulation Time - 14th Nov 19
The Case for a Silver Price Rally - 14th Nov 19
What Happens To The Global Economy If the Oil Price Collapses Below $40 - 14th Nov 19
7 days of Free FX + Crypto Forecasts -- Join in - 14th Nov 19
How to Use Price Cycles and Profit as a Swing Trader – SPX, Bonds, Gold, Nat Gas - 13th Nov 19
Morrisons Throwing Thousands of Bonus More Points at Big Spend Shoppers - JACKPOT! - 13th Nov 19
What to Do NOW in Case of a Future Banking System Breakdown - 13th Nov 19
Why China is likely to remain the ‘world’s factory’ for some time to come - 13th Nov 19
Gold Price Breaks Down, Waving Good-bye to the 2019 Rally - 12th Nov 19
Fed Can't See the Bubbles Through the Lather - 12th Nov 19
Double 11 Record Sales Signal Strength of Chinese Consumption - 12th Nov 19
Welcome to the Zombie-land Of Oil, Gold and Stocks Investing – Part II - 12th Nov 19
Gold Retest Coming - 12th Nov 19
New Evidence Futures Markets Are Built for Manipulation - 12th Nov 19
Next 5 Year Future Proof Gaming PC Build Spec November 2019 - Ryzen 9 3900x, RTX 2080Ti... - 12th Nov 19
Gold and Silver - The Two Horsemen - 11th Nov 19
Towards a Diverging BRIC Future - 11th Nov 19
Welcome to the Zombie-land Of Stock Market Investing - 11th Nov 19
Illiquidity & Gold And Silver In The End Game - 11th Nov 19
Key Things You Need to Know When Starting a Business - 11th Nov 19
Stock Market Cycles Peaking - 11th Nov 19
Avoid Emotional Investing in Cryptocurrency - 11th Nov 19
Australian Lithium Mines NOT Viable at Current Prices - 10th Nov 19
The 10 Highest Paying Jobs In Oil & Gas - 10th Nov 19
World's Major Gold Miners Target Copper Porphyries - 10th Nov 19
AMAZON NOVEMBER 2019 BARGAIN PRICES - WD My Book 8TB External Drive for £126 - 10th Nov 19
Gold & Silver to Head Dramatically Higher, Mirroring Palladium - 9th Nov 19
How Do YOU Know the Direction of a Market's Larger Trend? - 9th Nov 19
BEST Amazon SMART Scale To Aid Weight Loss for Christmas 2019 - 9th Nov 19
Why Every Investor Should Invest in Water - 8th Nov 19
Wait… Was That a Bullish Silver Reversal? - 8th Nov 19
Gold, Silver and Copper The 3 Metallic Amigos and the Macro Message - 8th Nov 19
Is China locking up Indonesian Nickel? - 8th Nov 19
Where is the Top for Natural Gas? - 7th Nov 19
Why Fractional Shares Don’t Make Sense - 7th Nov 19
The Fed Is Chasing Its Own Tail; It Doesn’t Care What You Think - 7th Nov 19
China’s path from World’s Factory to World Market - 7th Nov 19
Where Is That Confounded Recession? - 7th Nov 19
FREE eBook - The Investment Strategy that could change your future - 7th Nov 19

Market Oracle FREE Newsletter

How To Buy Gold For $3 An Ounce

Indian Rupee vs. Silver

Commodities / Gold and Silver 2011 Sep 21, 2011 - 04:18 AM GMT

By: Dr_Jeff_Lewis

Commodities

Investors shouldn’t forget one of the best sources of demand for silver and gold—India.  Gold was always a historically important commodity in India, where it’s seen as a store of wealth.  Silver, on the other hand, rose mostly as a necessary “poor man’s” entry into precious metals, which have risen far faster than wages in most of the emerging market economies.


Silver investors should watch the relationship between silver and the Indian currency, the Indian Rupee.  Because India is a source of demand for silver, and silver is mostly priced in major market currencies, the rise and fall of the Rupee can create large swings for silver.

The past year proves the relationship between silver and the Rupee.  As the Rupee moved higher in fall 2010, so did silver.  In January, the Rupee gave up ground, and silver followed.  The response could be attributed to some asset reallocation in the United States, but later price movements cemented the relationship.

The Rupee’s value peaked at the same point as silver in 2011.  In April and May, the Rupee reached its highest value for the year, and silver tacked on an impressive gain of more than 130%.  At this point, the Rupee had risen only 3.3% against the dollar.

Year over year, the Indian rupee is now down 3% against the dollar, and silver followed, giving up some of its gains to post a return of just over 94% for the year.

Emerging Markets on Fire

Emerging markets are an excellent source of investment demand for silver.  Seeing as inflation is as high as 10% in China, depending on the source, and just under 7% in India, emerging market workers have to hedge their bets with precious metals.  The equity and debt markets in most emerging market nations are still under development, and some nations restrict ownership of public stock only to the wealthiest classes in their respective geographic areas.

However, gold and silver are free; they can be purchased and owned by anyone.   As the financial markets are democratized and smaller futures contracts trade in new lands, the emerging markets will provide a new source of demand.  Since 2003, wages in the emerging markets have risen no less than 9% annually, a growth rate which is indicative of inflation, but also the reality that more production (and jobs) are flowing into markets where gold and silver are common investment vehicles.

Given that the Fed is now positioned to enact another round of quantitative easing, and the possibility of a complete reversal in employment trends is just about zero, the emerging markets should provide for a long-term source of investment demand.  Investors in the developed world should realize that while silver and gold remain far from mainstream compared to other asset classes, gold and silver are mainstream in the places where jobs are fleeing and wages are rising.  If investors add in the reality of emerging market inflation, it makes little sense to avoid the emerging markets on the basis of an economic slowdown.  The short-term ebbs and flows are certain, but the long-term trend is toward a lower dollar value against every world currency, and higher prices for silver and gold.

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com and Hard-Money-Newsletter-Review.com

    Copyright © 2011 Dr. Jeff Lewis- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules