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Is silver the new gold?

Silver is gaining ground across the globe because of two main drivers – first, it’s precious yet affordable; the ‘democratic’ metal is well within everyone’s reach.

Silver prices have stayed stable for a couple of years and are nearly eighty times lower than the price of gold. Second, silver is versatile – it correlates to fashionable, pret wear jewellery, which is an underlying lure for today’s generation, and it also fits into the slot of high-end designer jewellery, which is an investment and a keepsake. But first, let’s talk some figures: India is a huge exporter of silver jewellery and silverware. Silver bullion imports rose 36 per cent in 2018 to 6,958 tons, according to the World Silver Survey 2019 report, published by the Silver Institute. Industry experts estimate that the figure may have reached close to 7,000 tons in 2019 as well.

Ram Babu Gupta, convener of the Silver Jewellery Panel Committee, GJEPC, notes, ‘As exports have grown by about 20 per cent, it can be estimated that the import of silver bullion will grow by 15 per cent to 20 per cent.’ In 2019, the figures could hover around 7,000 tons. India is the third largest exporter of silver jewellery in the world, according to a GJEPC analysis based on UN Comtrade 2018 data.

Abhineet Boochra, spokesperson and director of Sangeeta Boochra, a jewellery export firm, notes, ‘We estimate the increase in import to be around 20-25 per cent. However, the import bill in the last quarter of 2019 has increased from the October quarter.

This means, in the last quarter, huge quantities are understood to have entered India. Indian consumers buy silver jewellery and investment grade bars and coins. Traders bought more silver this year than last year as a “tactical” purchase, which eventually has increased the imports volume. Excessively high price of gold, due to huge depreciation of the rupee, has also diverted precious metal buyers towards silver.

There was arbitrage demand for silver import due to higher price difference between futures prices of silver on major exchange MCX and spot market price. Traders are buying at spot market and selling future contracts whenever the difference between the two markets is markedly higher than normal.

Then, silver has industrial use as well, which has increased and hence would affect the imports.’ Global silverware fabrication rose 6 per cent year-on-year to 1,900 tons. India accounted for the bulk of the annual rise, increasing 10 per cent year-on-year to 1,301 tons and accounting for more than two-thirds of global consumption.

‘The annual increase in India was largely due to a rise in stock building from regional and national retail chains as consumer demand gathered pace, and a jump in exports, which more than doubled in 2018,’ the survey noted. Courtesy - Times of India



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