Stock markets have been volatile over the past few months. And this is not just the case with Indian markets. Stocks globally have been battered recently in wake of rising economic concerns in Europe. Fear of Chinese interest rate hike has also added its share to the jitters. And then there are the never ending troubles in the US economy. In all, the world economy remains on a roller-coaster ride.
Amidst all this, two commodities are enjoying their days in the sun. We are talking about gold and silver. While the yellow metal has risen almost 26% since the start of this year, its poor cousin silver is up 69%. Well, looking at silver's stupendous returns, it won't be right to call it the 'poor cousin' anymore!
Anyways, compared to these returns, those of the stock markets have been unimpressive. US stocks, for instance, are up just about 9% since the start of the year. And while stocks in India are up 12%, those in China are actually down 12%. So it has been a lacklustre performance from stocks worldwide this year.
Talking about gold and silver, there prices have largely been fear-driven. Fear of rapidly depreciating paper currencies has led investors to seek refuge in 'real money' assets like gold and silver. And it seems clear that these commodities are not anywhere close to their peaks.
Given the way the global economic scenario is panning out, we believe that gold and silver still have the pace to run up from these levels. As more people wake up to the fact that governments around the world have ruined their finances, and they plan to still destroy the value of their paper currencies, these commodities will rise.
Well, all this doesn't mean that these cannot fall in price in the short to medium term. Their past volatility suggests so. But if you are looking at the long term, we see the outlook for both gold and silver as pretty good.
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