Gold has found its place under the sun with stronger currencies losing much of their sheen. The money printing machines are working round the clock. Inflation in developed and developing nations is emerging as one of the biggest economic threats. Hence, the fall in gold prices does not seem a very near term possibility. But its inferior counterpart, silver, has also raised as many eyebrows. Prices of the white metal skyrocketed 84% in 2010. After that it went up another 54% so far in 2011. Much of the recent rally has been fueled by investors who are piling into exchange-traded funds. They are using it to hedge themselves against inflation or currency declines. Hence, while investors are looking for more ways to invest in this precious metal, users of the metal have had a tough time.

Unlike gold, silver has plenty of industrial uses. Three fourth of the world's silver is used for making jewelry, mirrors, solar panels, plasma televisions etc. Hence the producers of these items are desperately looking for silver substitutes. Not that they have found any feasible solution yet, but the desperation to reduce dependence on the metal may bring down silver demand. Even the silver miners are worried whether they can sell more of the metal at current rates. Hence if you are amongst those who are betting on the silver rally, make sure that you keep your exposure very limited.

Comments by J Mulraj