Traders, investors tread cautiously after losing in a highly volatile market .
The volatility in the silver market has shocked many. Those most hit by the drastic fall in the prices of the white metal are middle-level bullion traders and regular investors, including government and private employees.
The volatility has scared bullion traders so much that they have stopped giving spot delivery of silver. They also do not prefer to keep stock of the precious metal as they fear more fall in the prices.
Last Thursday (May 12), when the price of silver hit the level of Rs52,500 in Ahmedabad, the fall was historic, as it came down by 30% from the level of Rs75,000 on April 25. A fall of Rs22,500 in just 18 days has worried all those who deal in silver.
Even in the international market, the new high was around $48 an ounce which fell by 33% to around $32 an ounce.
The unpredictable situation has hit both the trading and investment market. Future and forward market players and retailers are not enthused to invest in silver, as they have suffered heavy losses due to price fall.
“It is high time for silver investors and players of forward market to watch the situation as they suffered losses up to Rs15,000 a kg,” said Hiren Soni, a trader who deals in bullion and jewellery.
He said he had sold silver bars at the rate of Rs70,000 per kg to many retail investors who hoped that the price would reach Rs80,000 a kg.
“But all their calculations have gone wrong and now they still hope that the market will again go up to Rs80,000 a kg,” Soni said.
Businessman Jiten (name changed) said that he had bought three kg silver at the price of Rs65,000 with the hope that the market will stick up to its rising trend.
“However, I suffered a huge loss and I have no other option than to keep my silver in the cupboard till the price begins to soar again,’’ he said.
If market sources are to be believed, the roller-coaster ride of silver is controlled by international-level players, who bring silver at a very low rate and sell it when the price goes up steeply. For example, they bought silver when the price was around Rs30,000 a kg but sold all their stocks when the market went all-time high up to Rs75,000 a kg.
"The international players earned high profits as they procured huge stocks of silver at a very low price and sold it when the market broke all the records," said Rohit Zaveri, officer-bearer of the CG Road Jewellers Association.
According to sources, bullion traders have stopped giving spot delivery of silver due to the volatile situation. They also do not want to keep stocks as they fear more downfall in the market.
"We are first taking the whole amount of silver from the buyer by confirming the price and give delivery after a couple of days," said a bullion trader on the condition of anonymity.
"We have started taking the amount first to confirm the rate and ensure that we do not have to face loss in the market that is highly volatile."
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