See good support for silver at $20-20.5/oz: Expert

Silver was at its weakest in over two years on Monday, as it tumbled 7 percent to USD 20.69 an ounce. According to Sunil Kashyap, MD of Scotia Mocat silver is driven right now by gold. Therefore it is reflecting the weakness seen in the yellow metal.

He believes USD 20-20.50 is a good support for the silver in the short-term. Also read: Gold falls for eighth session, silver down sharply Below is the verbatim transcript of his interview to CNBC-TV18 Q: What has led to the weakness that we have seen in silver prices currently? A: I think we have seen a huge fall in the price on Monday morning. There were some very large orders that came through the market specifically on Monday at the open. Close to 15 minutes after the open, we saw a lot of selling and that certainly moved the silver prices down by USD 2 per ounce. It was a trend that we have seen over the last few weeks. There has been selling of silver largely driven because people have been offloading positions in gold and that seen silver selling also take place. Q: What is the next best approach then, how would you advise retail investors to look at silver given the high volatility that we have seen offlate? A: Silver is very difficult metal in terms of retail investors. They need to be very careful, which is why it is a highly volatile and risky metal. It moves up and down very fast. We would say that as far as silver is concerned, if the investors are buying physical metal to hold, it is not a bad purchase especially in rupee terms. However, if a small investor is looking for a secure store of value, he is much better off being in gold rather than silver. Q: Where exactly do you expect silver to stabilise on a medium-term on a three months basis as well as on a possible six months basis? A: Silver is driven right now by gold so one has to look at what happens to gold. Generally, silver is an industrial metal so the underlying trends for supply and demand had already shown weakness. The demand from the solar panel industry which uses silver has been declining dramatically. Therefore we expect some amount of sell-off. I think at these levels there is quite a good physical demand for the metal which is underpinning the price right now. I would say that around USD 20-20.50 is a good support for the silver price in the short-term.