A big fall was recorded in gold and silver on Thursday. In the global market, where the price of gold was $ 5594 per ons, it fell to $ 5149 per ons. Whereas silver decreased from $121.64 to $108.8 per ons. Indian market is also not untouched by this. A fall of about Rs 90 thousand per kg was seen in the price of silver in 2 days. On MCX, silver touched the level of Rs 332002 per kg whereas earlier it was at Rs 4.20 lakh per kg. Gold also fell by more than 9% on MCX and became cheaper by Rs 16000 from the all-time high. What do market experts say about the fall in gold and silver? What will happen next? And what should investors do next? TV9 Bharatvarsh spoke to market expert Anil Rai regarding all the questions.
What is the reason for the fall in gold and silver?
Anil Rai told that the reason for this change is profit booking. The people who made the deals. In a way, people who had accumulated huge profits have been booked and the reason behind that is that a reversal or compulsion is being seen in the dollar. It is being speculated that the week that is going on at the dollar international level may now bring about a reversal, its weekiness will end. Some strength will be visible. In this hope in the coming time and as soon as the dollar strengthens, then the traders and big investors of gold and silver will consider it appropriate to book it at this level and what has happened is that almost very big investors have booked huge profits together. As a result of which you saw that in a single day a decline of about 15% was seen in silver and about 6 to 7.5% decline was seen in gold.
Silver fell by Rs 90,000 in two days
Anil Rai told that this can absolutely happen, what happens is that after such a move, retailers become a little panicky. This time it has been seen that investors have bought silver and gold in ETFs. A large number of them are retail investors. In terms of trading. If he starts redeeming his ETF. That means if you start selling it then there will be further pressure on the prices of both silver and gold. So, we will know this evening’s MCX trading and the international trading that happens at night and as it seems, it may fall further, if I talk about the level, then we had earlier made an estimate of the fundamental demand for silver.
According to him, if its level is measured in international US dollars, it should have been between 90 to 100 dollars, because there is a lot of industrial demand, that is why its value had increased. So its real demand should have been somewhere between 90 to 100 dollars. Roughly speaking, it should have been around 95 dollars, but it increased to 121 dollars and from there you saw that the collection came down to 108 dollars. Even now we are seeing a gap and a bubble because there was a huge gap between the physical demand and the paper contracts which we call future contracts. So that gap now seems to be filling to a great extent and it should stabilize around $100 to $95.
Silver fell just as fast as it rose
Anil Rai told that for investors, I will always say that investing in gold is beneficial because investment should be made in such a thing which does not have too much volatility, first of all there should not be too much danger and risk, there should not be too much ups and downs. We have always called silver the devil’s metal and the fickle metal. There is a sharp increase in its prices and then there is also a decline. In such a situation, it can be a scary experience for investors. The fall in gold is not seen that much. The specialty of gold is that once it has made a high, after a few days it turns around, reaches there again and if seen in the long term, it always moves upwards. There can be a lot of speculation in silver, so the possibility of speculation in silver is high. Therefore, avoid silver for now and continue investing in gold. It can be increased a little further in the fall.
If anyone has silver now, should they keep it or sell it?
Anil Rai told that if you have not booked profit yet. So the same thing I always ask is what were you thinking when you bought it? What was your perspective? Did you think of it in terms of trading or as a long-term investment? If your point of view is that I had invested for a short period of time to take advantage of its rising prices, then it is time that you book your profits and take them home. But if you thought that I will keep it for a long term and my investment will be for a long time, then in this fall you can reduce your cost by buying more in it. If I take a horizon of 5 years from here, you will see metals only higher up from here.
Should new investors invest in this decline?
Anil Rai said that investing in silver is not such that you invest immediately in the first fall, you wait for a while. So when there is a decline, do not delay it, see once, this decline stops a bit, after that when there are signs of going up, at that time increase the investment in small amounts. Do not make big investments all at once, hence you should never invest a large amount of your capital. Anyway, invest only 5% of your total portfolio in silver. And invest 15% in gold and the rest you can invest elsewhere, but do not invest more than 20% in these things, do not make such a mistake that you sell your shares in excitement and invest in gold and silver.
Is there a possibility of further correction?
There may be a correction in silver and there may be a slight correction in gold also. As we said, as the dollar strengthens, there is a possibility that we will see profit booking and pressure on prices in both these metals. As the geopolitical scenario calms down, although its chances are less, there is definitely a possibility that someone other than Jerome Powell will come. If he brings Hawkings instance. That is, if the government brings such policies which strengthen the dollar, then you will see pressure on the prices of both gold and silver in the international market.
Will the budget make any difference to prices?
Anil Rai said that one should wait for the budget. What we are saying is that new investors should not invest until the budget comes. Even before yesterday’s decline, we had already booked the profits of many of our clients so that you guys could get out. Because this budget is coming and there is a lot of volatility around the budget. The reason is that every policy in the budget, the risk factor which we call Vix, goes very high before the budget. That means the possibility of risk increases. People start speculating as to what will come and what not? In such a situation, people who trade take out their money from the market for once because in uncertain times, it is the weekend. Budget is also coming on Sunday, in such a situation there are big traders. If they do not want to keep much of their money in the market, then they are sitting with cash and it would be better if they invest again after the budget. Let us tell you that market experts believe that due to this fall, investors globally suffered a loss of about Rs 27 lakh crore.