Silver Rate in Kerala

• Inflation

Inflation is a constant factor that affects the price of commodities, including silver. This is why the 1-gram silver price in Kerala today is comparatively higher than a few decades ago. This is because silver is currency-denominated metal and therefore moves with the currency's value.

 

Because of this property, silver holds its purchasing power during currency devaluation (inflation) contrary to money, which loses its purchasing power. Purchasing power is determined by the value you can get from it. 

 

During inflation, the price of commodities increases, and you cannot get the same value from your money. However, since the price of silver also goes up, you can get the same value from it. 

• Supply and Demand

Supply and demand are fundamental concepts that affect the price of commodities, including white metal. When the balance between supply and demand gets skewed, the price fluctuates. In supply and demand, it is crucial to remember that numerous factors affect the demand. 

 

This includes auspicious events, festivities, and economic factors. In addition, the product's availability also plays a significant role. Silver is a precious metal and therefore has a finite supply. However, the demand for it has increased over the period. But due to limited supply, the demand is unmet. As such, the silver price in Kerala and other areas has seen a gradual rise.

• Gold Prices

Like silver, gold is a precious metal too. However, it is scarcer and has more value than the white metal. But both metals have the same properties and purpose. Therefore, the factors that affect the price of silver and gold also overlap.

 

Since it has more value, the reliance on gold is more than compared to silver. As such, the price of gold gets affected first. Since silver is a close second, it follows the trend of gold prices. In fact, expert investors track gold prices to estimate the price change of silver.

 

However, as a novice investor, you should avoid relying only on the gold price to know the movement of silver rate in Kerala or other areas. This is because there may be some instances where the gold and silver prices would not follow the same trend.

• US Dollar

The base currency for precious metals like silver and gold is USD. This means that they are traded in dollars. As such, any change in the value of USD results in a difference in the price of silver. The impact, however, is inverse.

 

This means that when USD is strong, purchasing silver would be expensive, so not many would prefer to invest in it. This would ultimately reduce the demand, lowering the price. However, if USD is weak, purchasing silver would not be as expensive and attract more investors.

 

With more investors wanting to buy silver, the demand will increase, increasing the rates. In the past few years, the strength of the USD has gone down due to numerous reasons. As such, the silver gram rate in Kerala and other areas has increased.

• Crude Oil Prices

Silver is a mined metal. The mining process requires crude oil, and is affected by the cost. These get added to the cost of mining and, therefore, silver. As such, any fluctuation in the crude oil price will change the silver price.

 

The relationship between crude oil prices and silver prices is direct. This means that when the oil prices go up, the silver rate in Kerala and other areas goes up, too and vice-versa. However, since other factors are in play, you cannot rely solely on oil prices to estimate the silver price. 

• Interest Rates

Market-linked investments give returns based on the interest rates offered. These interest rates get affected by numerous factors, including the nation’s monetary policies. A low interest rate would result in lower returns and vice-versa.

 

On the other hand, precious metals like silver are long-term appreciating assets and therefore have an inverse relation with market-linked instruments. This is because, when the rates go down, it would push investors towards silver to get the returns and vice-versa. This ultimately impacts the demand and the silver price in Kerala and other areas. 

• Taxes and Other Costs

Silver is subject to taxes like every other commodity available across the country. Moreover, silver gets imported and is subject to additional charges like import duty. These taxes and charges get added to cost and therefore affects the price of silver.

 

In addition, the local taxes and transportation costs differ from one area to another and get added to the cost of silver. However, since it differs, the final silver price is also different. As such, the silver price today in Kerala will not be the same as that of other cities. 

• Economic and Political Climate

The economic and political climate of the country is a significant factor affecting the silver price. This is because the climate ultimately affects the value of the country’s currency. If people lose faith in the currency's value, they will get more attracted towards precious metals like silver.

 

An example of this is the COVID-19 pandemic that changed the economic landscape. Due to the uncertainty during this period, more people relied on precious metals because they generated better returns in the long run. As such, the silver rate in Kerala and other areas saw a steep rise.

 

Now that you know today’s silver rate in Kerala and the factors that affect it, keep an eye out for these and track the prices to get the best value. You also need to consider diversifying your investment portfolio into different asset classes.

 

Portfolio diversification helps you mitigate the risk, thereby minimising the loss. This enables you to secure better returns and financial growth while protecting your wealth.