Indians bought 220 tonnes of silver during the Dhanteras-Diwali period, the highest in two decades, according to figures collated by the India Bullion & Jewellers Association (IBJA). Sales of silver surged by 37%compared to 160 tonnes in the same period last year.
Silver coins of 5 and 10 grammages made up 60% of the demand with the rest comprising utensils, diyas (lamps), idols and jewellery, as per IBJA.
“Silver worth Rs 2,200 crore have been sold during the Dhanteras-Diwali period. This has never happened at least in the last 20 years. Silver still has enough legroom to see a further northward movement. So, the consumers have invested in silver,” said Surendra Mehta, national secretary of IBJA.
Spiralling gold prices and silver breaching a 11-year record to touch Rs 1 lakh per kg prompted consumers to rush to buy silver this Dhanteras-Diwali, considered auspicious to buy these safe-haven assets. IBJA said 47 tonnes of gold were sold during the festive period, 15% less than last year, as prevailing higher prices deterred many potential buyers.
Since the start of 2024, silver has seen robust gains, rising by nearly 34% to Rs 1 lakh per kg during Dhanteras-Diwali. On Tuesday, silver was trading in the physical market at Rs 96,765 per kg.
“There is volatility in the precious metal market over the last two days because of the US presidential elections followed by the Federal Reserve meeting on the rate cut. This is normal during any such major global event. But silver is on a bull run because it has remained underpriced for a very long time. We are expecting silver to touch Rs 1.5 lakh per kg by next Diwali,” said Prithviraj Kothari, managing director of RiddhiSiddhi Bullion.
Silver is used in many modern technologies including electronics, solar panels, batteries, and semiconductors.
Growing demand for electric vehicles (EVs), which require 15-30 grams of silver each, is a major driver. Transition to renewable energy and the emergence of AI is also expected to drive silver demand.
Investors are seeking safe-haven assets like silver amid geopolitical tensions such as the Russia-Ukraine war, the Israel-Hamas war, and tensions between the US and other countries, said Kothari.
Global silver deficit is expected to rise by 17% to 215.3 million troy ounces in 2024 due to a 2% increase in global demand led by robust industrial consumption, and a 1% fall in total supply, according to the Industry Association-Silver Institute.
“Indian investors typically see silver as an opportunity-it is a diversifier, helps in better asset allocation. It is fairly liquid,” said Nilanjan De, director of Wishlist Capital, a wealth management firm.
“Silver prices are expected to witness further traction. While short-term volatility is very much anticipated, the longer-term perspective is fairly robust.”
