Over the last few years, it has been observed that investment in precious metals like Gold and Silver have yielded very attractive returns. The recent profit booking in the global commodity markets was a long due, as the prices had gone up quite sharply which was unjustified to their fundamentals. No doubt, the short term view for precious metals is uncertain, but due to the several factors the long term view is very bullish.
Due to the past global economic slowdown, the developed as well as developing countries had given a huge stimulus packages to boost their economy, which caused them under a huge debt. Although the global economy has improved a lot, yet there are many uncertain and gray areas still ahead. Therefore the demand for precious metal will remain intact in the coming days.
Significantly it has been seen that, in addition to the existing demand from jewellery segment and the industrial sector, the demand for precious metals moreover is coming from the small investors, hedge funds and also from the governments of various countries. Therefore the supply of precious metals is not matching in line with the increase in demand.
Now a day, many investors are trading in precious metals in both the physical as well as derivative markets. This increase activity in the market has distorted the demand-supply equation and also one of the most important reasons behind the volatile price movements in precious metals. Therefore it is very easy to say that in the short term, the prices will remain highly volatile. Therefore an investor should utilize this ongoing phase of correction as an opportunity to invest for medium to long perspectives.