For the first time in the history of the Indian jewellery market, silver sales surpassed gold during this Dhanteras season. High gold prices have dampened consumer demand, leading shoppers to turn to silver instead.
“Silver sales have shot up 30-35% this year despite prices being 40% higher than last Dhanteras,” Surendra Mehta, national secretary at Indian Bullion & Jewellers Association (IBJA), told ToI. “We are collating data for silver because this is the first time we are seeing such a huge demand,” he added.
The surge in silver demand is also driven by its expected high industrial demand, mainly from electric vehicle manufacturers. “People have now begun to understand that there is a real opportunity in investing in silver,” Mehta said.
While silver demand increased by 30-35%, gold sales fell by 15% to around 35-36 tonnes compared to 42 tonnes last festive season. However, due to the 30% rise in the average price of gold, the total value of gold sales reached nearly Rs 28,000 crore, up from about Rs 24,000-25,000 crore last year.
The World Gold Council has projected that India’s gold demand may hit a four-year low in 2024 due to the ongoing record-breaking rally in prices. Gold prices on NYMEX surpassed the $2,800 per ounce mark for the first time, influenced by global uncertainties, geopolitical issues, the US election, and continuing demand from central banks and the solar energy industry.
Gold demand in India, the world’s second-largest consumer of the precious metal, is expected to be between 700 to 750 tonnes in 2024, the lowest since 2020, according to Sachin Jain, regional CEO (India) at WGC.
In the local market, gold prices hovered above Rs 80,000 per 10 grams, while silver prices remained above Rs 1 lakh per kg.Saumil Gandhi, senior analyst at HDFC Securities, noted that gold’s recent record came after US treasury yields and the dollar fell following mixed US macroeconomic data.
Meanwhile, following a significant surge this year, with domestic silver prices reaching the ₹1 lakh per kg milestone, analysts suggest that investors may consider buying on dips in the upcoming 1-3 months, potentially allocating 3-5% of their portfolios to the precious metal. Since the beginning of 2024, silver has risen by 33.65%, while in the past month alone, it has appreciated by 12.5%.
This performance has outpaced the Nifty 50 index, which recorded a 12.5% return year-to-date but experienced a 5.6% decline over the last month. In dollar terms, silver’s gains stand at 47.25% and 13.56%, respectively.
An analysis conducted by Capitalmind Financial Services highlights that a low-volatility portfolio maximizing returns since 2000 would have featured a heavy allocation to gold—62% gold, 35% Nifty, and a modest 3% in silver.
Anoop Vijaykumar from Capitalmind said that a portfolio focused on equities, with a moderate gold component, could provide more stable risk-adjusted returns along with potentially higher absolute returns and reduced drawdowns compared to a strategy invested solely in Nifty or equities.
Typically, investors adjust their allocations to silver and gold based on market conditions and their individual risk tolerance.
(With ToI inputs)
