Rubber turns out to be a better investment than gold, silver

Ahmedabad, April 18

Very few investors would have ever imagined that an agricultural crop like rubber could give them better returns than gold, silver, Nifty or Sensex. But this has actually happened over the last one year.

The trend, according to an official of National Multi-CommodityExchange (NMCE) here, shows that rubber has emerged as the best bet for the investors for getting the highest returns on their investments when compared to major asset classes.

As on March 31, 2010, if gold and silver gave return of 7.19 per cent and 22.6 per cent on investment respectively, rubber produced an unprecedented return of 86.74 per cent.

Even Sensex and Nifty gave returns of 77.01 per cent and 71.54 per cent respectively.

In fact, over a first three-month period, gold and Sensex gave negative returns of 1.91 per cent and 0.18 per cent respectively.

Tightly balanced market

Currently the rubber market is very tightly balanced globally as well as in India. And when there is a tightly balanced demand and supply situation, even a small change in either demand or supply will have a disproportionately large impact on prices. That is exactly what is happening now.

Positive signals

Global growth signals are very positive in the largest consuming country like China, where the auto sector sales are booming.

India also is having huge upsurge in rubber demand, thanks to earlier import inventories.

Otherwise, the situation would have been more alarming, the official said.

While there is a huge, increasing demand for rubber, the supply has not kept pace with it. Also, the imports are very expensive due to high international rubber prices and 20 per cent import duty on rubber.Therefore, the rubber prices will remain firm for some time.

(thehindubusinessline.com)