Role of monsoon in agricultural communities as well as its influence on silver trade in India.
* Monsoon: India’s Buying Season of Silver
As winter starts nearing, trade of precious metals in India increases as this season is full of festivals. World’s largest consumer of gold and fourth largest consumer of silver, India’s cultural festivals and religious events are closely related with precious metals. The trade of gold and silver is highly influenced by Indian market during this season as both the metals play an important role in the India’s cultural festivals as well as weddings. This is one of the key factors that influence the seasonal price movements of gold and silver.
According to the experts, during the time period between early September and early December, price on silver tend to go up by about 11.4 percent on average. The statistics also reveal that the best months for silver prices are November, January, February and May. About 4 percent to 5 percent gains can be expected out of the trade done during the months suggested above.
The 2010 autumn and 2011 winter saw silver price rising steadily from about $ 19.50 per ounce to $ 30.50 per ounce.
* Monsoon and Precious Metals Trade in India
In addition to the factor mentioned above, there are a huge number of other factors such as agriculturally healthy and poor monsoon season that influence silver price movements in a given period. Given that almost 70 percent of gold and silver is bought by rural farmers and the country is one of the world’s biggest agriculture oriented countries, Monsoon plays a vital role in deciding precious metals’ prices. Cultural values in the rural areas make farmers park their money in precious metals than save it in a bank account. Rural farmers or people from India trust their jewelers than banks.
As prices on gold are shooting higher and higher, majority of farmers from India are now heading towards buying silver as an alternative. Rural communities in India hold very high significance for silver coins, jewelry and bars. As a tradition, many farmers buy silver blocks and bury them at not-so prominent spot in their farm as an offering or a prayer for a good harvest.
Agriculture in India is highly dependent on Monsoon. Too less of a rainfall indicates loss of agricultural output in form of money. The monsoon season in 2010 was quite healthy and that resulted in record grain production. Year 2010-11 estimated 241.56 million tons of food grain production, more by 5.4 percent than that of from the previous season.
Now, its time to wait and watch if the winter of 2011 and healthy crop season of this year results into India’s rural communities demanding for silver more strongly as a way of investments.