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India’s Buying Could Be Great for Silver Prices

Over the past few months, silver prices have been trading below $15.00. This may be a bold call, but it is worth making at this point: 2018 could be the last time in a while that silver trades at this low level.

It can’t be stressed enough that the fundamentals of the silver market continue to improve. There are basic economic factors at play here.

We are seeing new buyers in the silver market. They could take the silver price much higher.

More specifically, look at India. Usually, India is associated with its demand for gold. But it’s now building up an appetite for silver.

Consider that in October 2018, $526.2 million worth of silver was imported into the country. In the same month a year ago, $346.7 million worth of silver was imported. This represents an increase of over 51% year-over-year. (Source: “Quick Estimates For Selected Major Commodities For October 2018”, India’s Ministry of Commerce and Industry, last accessed December 13, 2018.)

Let me be very clear: October wasn’t an anomaly for silver imports in India. There’s certainly a positive trend in the amount of silver being imported into the country.

In fact, it wouldn’t be shocking if we find out sooner rather than later that Indian buyers are favoring silver over gold.

In October, as silver imports surged by 51%, gold imports into the country plunged by close to 43% year-over-year.

Why Would India Be Building an Appetite for Silver And Ditching Gold?

Know that an ounce of gold costs about 88,000 rupees in India. It may be difficult for an average person to buy gold considering the average per-capita income in India is 80,000 rupees. (Source: “India’s average per capita income higher in last 4 years at Rs 80,000”, Business Today, August 8, 2018.)

Silver is still relatively affordable. Silver prices in India are around 1,056 per ounce.

So, Indian consumer could be favoring the gray precious metal over the yellow precious metal.

Here’s the thing: It’s possible that the demand for silver will increase in India. This is because the Indian rupee has been on a roller-coaster ride lately. It has been one of the worst-performing currencies against the U.S. dollar.

The Indian rupee could decline further.

This could cause Indian consumers to run for safety. Just like gold, silver does that job as well—it protects value when the currency depreciates.

Silver Price Outlook for 2019: Bullish Outlook Ahead

Dear reader, over the past few years, precious metals have been ignored. This was mainly because other assets like stocks were showing stellar performances.

In 2018, the stock market gave investors a very hard time.

In 2019, they could be looking elsewhere. Precious metals could be where they look to preserve capital.

Keeping in mind the silver demand in India and the performance on the stock market in 2018 so far, 2019 could be a great year for the gray metal. We could see the silver price move higher.

I am also keeping a close watch on low-cost silver miner stocks. As silver prices have remained subdued over the past few months, silver miners have come under fire from investors. They are now presenting a great opportunity.