LONDON (Commodity Online): It seems there is no end to the Silver rally as the metals zoomed to a new record high at the Indian  and global markets this week.

Reason for the big rally is that the metal’s industrial demand has gone up.  From the festival season of 2009 to the one just coming up, silver rose 28%, from Rs24,040 per kg to Rs30,785. Experts predict prices will rise more by Diwali, which is on November 5-6.

Analysts expect silver to run up to Rs35,000 per kg, and Gold to Rs20,000-21,000 by the festival of lights. The global uncertainty and loss of faith in the dollar will Lead people to invest in precious metals.

Silver prices have increased because there was higher demand for base metals. But the trend may not continue. Silver is used in a lot of industries and follows copper, zinc, etc. But as base demand will be slower and the macroeconomic picture remain dull, people will gravitate to other asset classes.

Experts said that the thing with silver is that when it moves up, it does so sharply. So it’s riskier because of greater volatility, unlike gold.

In London, spot Silver hit $19.91 a troy ounce on Monday, up 0.4 per cent. The metal is trading just under the $19.92 intraday peak it hit on Friday, the highest since March 2008.

The metal is attracting hedge funds and other short-term investors. Speculative bets on rising silver prices on the New York-based Comex market last week hit their highest level since December.

The growing interest from speculators in silver contrasts with last year, when investors dumped it. Silver suffered in 2009 as the metal is used in industrial applications, such as in batteries, glass and electronics. Companies cut buying sharply due to the economic crisis.

But as demand returned this year from industrial consumers, prices rose sharply, even outperforming gold. Silver prices have risen by 18 per cent since the beginning of the year, ahead of gold’s 14 per cent gain in the same period.

GFMS, the London-based precious metal consultancy, forecast a solid gain in silver use this year from industrial applications and investor demand.

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