MUMBAI/LONDON, February 5: Silver prices continued to soar for the second consecutive day on the bullion market in Mumbai on Thursday due to sharp upsurge in international prices. The white metal shot up further by Rs 340 per kg to close at Rs 9,350.With this, silver prices have sky-rocketed by a whopping Rs 660 per kg in the last two days, the biggest jump in the decade.
This follows the sharp jump in the overseas price of the white metal. London silver was fixed on Thursday at 754.60 cents an ounce, a fresh nine- and-a-half year high fuelled by short covering and speculative buying sparked by news that US billionaire Warren Buffett holds 20 per cent of the world's annual silver supply.
``However, demand in the domestic market was very thin and the only reason for the further sharp rise in prices was the sharp upsurge in the international prices,'' according to M L Damani, President of the Bombay Bullion Association.
He said due to the sharp rise in the global prices, supply to the country alsodropped steeply as the local prices were lower than the landing cost of imported silver, thus creating an acute shortage of fresh stock.
In London, silver opened steady on Thursday morning but jumped more than 20 cents in later trading to above $7.40. It was last bid at $7.41/$7.46 after a high of $7.50 bid. Dealers said there was massive trade in silver. "There is buying everywhere, basically it is just universal borrowing and there is just enormous buying," one London dealer said.
Investor Warren Buffett announced on Wednesday that he had bought around 20 per cent of the world's estimated annual supply of silver.
Another dealer said Buffett had probably forced those people who were short into covering their positions.
``These people have been told there's a squeeze going on so they are rushing to short cover. He's trying to flush those people out of the woodwork," she said. Tightness in silver supplies for immediate delivery was confirmed by the rising one-month lease rate for the metal, which rosethrough early Europe to more than 50 per cent compared with the more usual two or three percent.
The same dealer said any talk off imminent dishoarding of silver from India, the world's largest consumer of a metal it uses for heavy ornamental jewellery, was premature even if the price rises another couple of dollars.``They could be ripping from their wives' necks and selling it but it would take a good month before that's in the market,''she said. Asked where the market might head next, the dealer described it as impossible to predict with technical charts offering few clues.
In Hong Kong anxious short-covering helped silver to maintain its upward journey in Asia today and shot up further to touch a new high of 7.25 US dollar an ounce. It commenced on a higher note at US $ 7.20 an ounce from previous level of US $ 6.96 and picked up further to US $ 7.30 on nervous buying by dealers and commision houses to cover their short positions. However, it declined on to finish at US $ 7.25 an ounce.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
