Gold has long been the darling of Asian investors. But its lesser cousin silver may now be coming into its own as an investment asset.
Demand for physical silver has rocketed in the past few months, propelled by repeated "quantitative easing" (QE) in the US, the waiver of goods and services tax (GST) on precious metals here last October, and the belief that it is undervalued relative to gold.
Silver Bullion, one of the oldest physical silver dealers in Singapore, said its sales have tripled since last October to about $6 million a month. The firm launched trading through a website in April 2009 and has seen revenue grow from $7.6 million in 2010 to $31.5 million last year.
Another dealer, GoldSilver Central, said it has seen more demand for silver than gold - surprising even the founding partners themselves. About 60 per cent of GoldSilver's sales is from silver. "Initially, when we first started (last March), a lot of my partners were sceptical; we had only one or two believers in silver. Most of them were actually gold buffs," said MD Brian Lan. "They were quite surprised that silver did well, and that there were a lot of people looking for silver as an investment tool."
The most popular silver products are the Mapleleaf coins of the Royal Canadian Mint, the American Eagles coins, as well as 100-ounce bars, the dealers said.
The GST waiver announcement catalysed interest in investing in physical precious metals, with more new investors buying after last October, when the waiver took effect.
Besides kicking up more demand, the GST waiver has also drawn new players into the physical silver market here. Swedish dealer Liberty Silver set up an outfit called Bullionstar in Singapore last August. Even though it has not started trading, enquiries have been "overwhelming", said regional manager of operations Zane Lim.
Some 70 per cent of the enquiries he has received centre on silver.
In contrast to the practices of gold-trading companies such as Genneva and The Gold Guarantee that have recently fallen into disrepute, these dealers do not offer a regular payout to customers for buying bullion; ownership of physical silver is fully transferred to the customer upon the sale. Buyback of the precious metal, if any, is also done at market prices and not a pre-fixed rate.