Silver investors should watch the relationship between silver and the Indian currency, the Indian Rupee. Because India is a source of demand for silver, and silver is mostly priced in major market currencies, the rise and fall of the Rupee can create large swings for silver.
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The Rupee’s value peaked at the same point as silver in 2011. In April and May, the Rupee reached its highest value for the year, and silver tacked on an impressive gain of more than 130%. At this point, the Rupee had risen only 3.3% against the dollar.
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Emerging markets are an excellent source of investment demand for silver. Seeing as inflation is as high as 10% in China, depending on the source, and just under 7% in India, emerging market workers have to hedge their bets with precious metals. The equity and debt markets in most emerging market nations are still under development, and some nations restrict ownership of public stock only to the wealthiest classes in their respective geographic areas.
Silverseek.com
