The demand is also expected to be bolstered by improving global economy.
According to the International Monetary Fund (IMF), the world is projected to grow 3.9 per cent in 2018, against 3.7 per cent in 2017, and 3.2 per cent a year before.
ratio in the past two decades has sharply reversed from the level of around 80. The current level of 78.5, therefore, is seen on a higher side.
Institute notes: “We expect the silver
price to experience a volatile ride. Short covering in the beginning of the year has already propelled the price above last year’s average. On a ratio with gold, silver
has plenty of room to improve and migrate towards its long-term (20 years) average of around 64. With physical gold
investment likely to be robust via risk-hedging, silver
should benefit by proxy, given the propensity of professional speculators to leverage gold
exposure through silver, and retail investors to buy silver
instead of gold
if they cannot afford the latter.”
ratio’s five-year average is also lower at 69.88. The 10-year average is 63.7 and 15-year at 62.5. More than that average price, silver
has almost remained at the same level in the past few years, indicating a long period of consolidation.
"We also expect the average gold-silver
ratio to move towards its long-term average, as we expect an outperformance by silver. Silver
would benefit from a positive sentiment on gold.
However, the higher beta of silver
would lead to an outperformance,” said Chirag Sheth, research consultant (South Asia) at Metals Focus.
In the price-sensitive India market, consumers buy at low prices. As the prices are low, imports are also rising. “For India’s silver
imports, 2017 was a strong year, with outward trade almost doubling from the previous year to 183 million ounces (about 5,700 tonnes).
The strong increase is on account of a combination of healthy jewellery demand and a shift from business conducted previously in cash to more formal channels. In 2018, we expect the silver
demand from jewellery fabricators to remain strong, pushing imports to approximately 180 million oz, a little less than in 2017,” the institute says.