Gold and Sensex beaten by Silver in 2010

January 10th, 2011 by James

Gold and Sensex beaten by Silver in 2010Silver may be considered as the poor cousin of gold but it sparkled more than gold and stock market benchmark Sensex in 2010 in terms of returns for investors.

The year 2010 saw silver shining more than the stock markets as the shiny metal soared to a 30-year high. Silver prices were able to register a whopping 65 per cent growth in domestic markets and a 75 per cent jump in the US.

From in.finance.yahoo.com:

In the process, it surpassed the Sensex, which saw a modest growth of a little over 15 per cent in the year gone by. Gold didn’t glitter much as well, rising by just about 25 per cent during the year.

Analysts attributed the smart growth in prices of silver to the risky nature of equities, which prompted investors to shift their funds to safer havens such as precious metals, thereby enhancing investment demand.

“Amidst the ongoing European debt crisis and the Federal Reserve and other central banks pumping in money into economies to shore up the recovery, investors turned cautious toward the stock markets,” said an expert.

“In normal circumstances gold is preferred as a safe bet for hedge against inflation, but looking at the historical highs of the yellow metal, investors turned their focus toward the ‘poor man’s gold (silver)’ which was still on the sidelines,” Unicon Securities Vice-President (Research) Madhumita Ghosh said.

A weaker greenback also boosted prices of silver, as commodities denominated in dollars became cheaper for holders of other currencies.

The major factor that played a significant role in the rally in silver prices besides investment demand was inflationary expectations in the US that triggered buying of the precious metal as a safe and alternate investment.

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